Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — COLONIAL EMPIRE

Loans

Mr. Thomas Reid: asked the Secretary of State for the Colonies in how many cases since 1900 have the repayment of Colonial loans been waived and therefore met by the British taxpayer; and what was the total sum so waived.

The Secretary of State for the Colonies (Mr. Creech Jones): As the reply contains many figures I will, with my hon. Friend's permission, circulate a statement in the OFFICIAL REPORT.

Mr. Reid: Can my right hon. Friend say what the total sum was, and if in the case of the very big loans which have been raised recently by the Colonies, the British Government, although they may have no legal responsibility for repayment of loans are in fact responsible because the funds in question are trustee securities?

Mr. Creech Jones: The total sum, including loans to the High Commission territories in South Africa and, I believe, Newfoundland as well, is in the neighbourhood of £17 million. I should have to consider the last part of the supplementary question before giving an answer.

Sir Waldron Smithers: Do these loans and their destinations come under the scrutiny of the Auditor-General?

Mr. Creech Jones: Yes, Sir, most emphatically.

Following is the Statement:

Since 1900 the repayment of 28 Colonial loans has been waived by His Majesty's Government; the total sum

waived is £16,681,384. This figure includes three loans in respect of the South Africa High Commission territories of Swaziland and the Bechuanaland Protectorate, totalling £653,400, and one loan of £124,098 in respect of Transjordan.

In addition there have been 61 cases in which loans made for schemes under the Colonial Development and Welfare Acts of 1929, 1940 and 1945 have subsequently been converted, either wholly or in part, to free grants, involving a sum of £1,203,349. Of these conversions five, totalling £563,773, have been in favour of Newfoundland and 28, totalling £273,069, in favour of the South Africa High Commission territories.

Colonial Service

Sir Waldron Smithers: asked the Secretary of State for the Colonies how many appointments have been filled in the Colonial Service in the last two years; and what is the present total cost of their salaries and allowances.

Mr. Creech Jones: The number of expatriate officers recruited to the Colonial Service by my Department in 1948 and the first nine months of the present year was 2,329. As these officers are paid by Colonial Governments at rates which vary widely according to the nature of the job and the locality in which they are serving, I regret that it would not be possible to answer the second part of the Question without imposing undue extra work on my officials.

Sir W. Smithers: In view of the desperate economic situation caused by this Government, were these appointments all really necessary?

Mr. Creech Jones: I think there is a very great deficiency of administrative officers.

Mr. H. D. Hughes: As colonial development is still being held up by the shortage of qualified personnel, will my right hon. Friend say how many vacancies there still are in the Colonial Service and what steps are being taken to fill them?

Mr. Creech Jones: I made a statement to that effect in the House last week.

Mr. Dodds-Parker: asked the Secretary of State for the Colonies what special terms by way of increased pension or gratuity are given to members of the


Colonial Civil Service recruited from overseas on abolition of office in the event of a territory being granted self-government.

Mr. Creech Jones: This is a matter which has to be considered as the occasion arises. Compensation in past instances has been generous and reasonable.

American Geologists

Mr. R. Robinson: asked the Secretary of State for the Colonies whether he has now completed his negotiations with the Economic Co-operation Administration with regard to the attachment of 28 American geologists and associated scientists to the Colonial Geological Survey Service; when recruitment will begin; and to which Colonies will these geologists be sent.

Mr. Creech Jones: Yes, Sir, and I hope recruitment will begin very shortly. Only 26 geologists are now required, 10 will be posted to West Africa, 13 to East and Central Africa, two to the Borneo territories and one to British Guiana.

Students' Hostels (British Council)

Mr. Lennox-Boyd: asked the Secretary of State for the Colonies whether he will now give further details of the arrangements with the British Council for the accommodation of Colonial students.

Mr. Creech Jones: As from 1st January, 1950, the British Council will take over from the Colonial Office arrangements for accommodation and hospitality for Colonial students including the administration of the students hostels. I propose that the details of these arrangements should be made known in a public announcement which I hope will be ready very shortly.

Mr. Sorensen: Will it be possible in future to ask Questions of the Colonial Secretary regarding this accommodation when the British Council is taken over?

Mr. Creech Jones: I should like to have notice of that.

Mr. Driberg: Can my right hon. Friend say roughly how much is to be charged by the British Council, and whether he is of the opinion that the ex-Service men on temporary release who are among these students will be able to afford to

stay at these British Council hostels as a result of his Department's recent very unwise and shabby circular to them?

Mr. Creech Jones: I do not know much about the circular referred to. The standard of charges will not, I think, be any higher than that now operating in the hostels.

Mr. Wilson Harris: Is the cost of this activity borne by the funds of the British Council and, if so, is there any danger of its being restricted owing to the impending cut on those funds?

Mr. Creech Jones: No, Sir. The cost will be provided by a grant under the Colonial Development and Welfare Act.

Mr. Driberg: As my right hon. Friend is not aware of the circular, will he investigate and find out if it is not the case that it threatens all these students that their standard of living will be reduced very drastically and their allowances cut down?

Mr. Creech Jones: I am not aware of the circular to which my hon. Friend refers, and would like particulars of it. I can only say that in large numbers of cases overseas Governments have recently increased the amount of the scholarships and of the allowances payable to students in London.

Mr. Sorensen: Do I understand my right hon. Friend correctly as saying he does not know whether he can be asked questions in the House about the work of the British Council in this respect?

Mr. Creech Jones: As I have said, I would like notice of that, so that I may consider the implications of the question.

Trustee Territories (Discussions)

Mr. Lennox-Boyd: asked the Secretary of State for the Colonies whether he will publish as a White Paper an account of the recent discussions at Lake Success on Trustee Territories.

Mr. Creech Jones: I will gladly arrange for an account of these discussions to be published.

Development Schemes

Captain John Crowder: asked the Secretary of State for the Colonies the capital expenditure so far on the Gambia


farm project; and what are the short-and long-term prospects of return on this expenditure.

Sir Peter Macdonald: asked the Secretary of State for the Colonies (1) how long he expects the salt production scheme in the Turks and Cacos Islands to be under way before it begins to pay its way; and how much will have been expended by that time;
(2) from what source animal feeding-stuffs for the Gambia scheme have been obtained; and what was their quantity and cost;
(3) the expenditure so far on the development of timber in British Guiana; and how many foreign experts and technicians will be associated with it.

Mr. Creech Jones: I regret that I have not this information and would refer the hon. Members to the Colonial Development Corporation, who are carrying out the schemes referred to.

Captain Crowder: Does not the Minister interest himself personally in these very important economic affairs of territories of which his Department is more or less in charge, and could not he get some information for us?

Mr. Creech Jones: This is a responsibility for the Colonial Development Corporation, which operates under its statute. There are monthly meetings between the representatives of the Corporation and my office in which all these matters in regard to the development of the activities of the Corporation are brought into review.

Mr. Oliver Stanley: Was not the right hon. Gentleman told at the last monthly meeting the answer to these Questions?

Mr. Creech Jones: No.

Mr. Stanley: Will he be told at the next meeting?

Mr. Baldwin: In view of the alarming statements which are being made about the Gambia scheme, could we have a progress report to know how it is proceeding, and can the right hon. Gentleman assure us that its accounts are being kept so that it does not get into the same mess as the groundnut scheme?

Mr. Creech Jones: That is not likely to happen. If I may refer the hon. Member

to the report recently published by the Colonial Development Corporation, he will discover there certain particulars regarding the scheme and the progress being made.

Oral Answers to Questions — MALTA (U.N.O. ASSISTANCE)

Mr. Hollis: asked the Secretary of State for the Colonies how far the recent assistance given by the United Nations Organisation to the people of Malta was given at the request of, or after consultation with, His Majesty's Government.

Mr. Creech Jones: I assume the hon. Member is referring to the assistance which the United Nations International Children's Emergency Fund has just agreed to provide to Malta for an anti-tuberculosis B.C.G. campaign and a milk conservation programme. This assistance has been granted in response to an application made by His Majesty's Government at the request of Maltese Ministers.

Oral Answers to Questions — KENYA

Coffee

Mr. Harold Davies: asked the Secretary of State for the Colonies the amount of coffee exported from Kenya to Italy for each month of the past year.

Mr. Creech Jones: As the answer consists of a table of figures I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

The following is the table:

The amount of coffee exported from Kenya to Italy has been as follows:

1948:

November—267 cwt.
December—100 cwt.

1949:

January—50 cwt.
February—nil.
March—nil.
April—nil.
May—nil.
June—nil.
July—261 cwt.
August—485 cwt.
September—274 cwt.
October—923 cwt.

Mr. Harold Davies: asked the Secretary of State for the Colonies whether his attention has been drawn to the cancellation of the weekly coffee auctions in


Nairobi following an official announcement by the Kenya Government that coffee was being sold for hard currencies; and whether he has any statement to make.

Mr. Creech Jones: I am aware that the weekly coffee auctions in Nairobi were cancelled by merchants on 26th October, pending consideration of large sales abroad for soft currency which might through resales have represented loss of hard currency to the sterling area. The auctions have now been re-opened. The Kenya Coffee Board have voluntarily agreed to divert 25 per cent. of the remaining "free" crop to hard currency destinations although this means a sacrifice in the returns to growers.

Mr. Davies: Has my right hon. Friend any estimate of what this country has lost through those leakages?

Mr. Creech Jones: I am quite unable to say, but I am in consultation with the Governor about it.

Jivraj Air Services Ltd. (Licence)

Sir Wavell Wakefield: asked the Secretary of State for the Colonies why the licence to Jivraj Air Services Limited in Kenya has been suddenly terminated by the Director of Civil Aviation in East Africa; and why the company's request for a period of three months grace has been refused.

Mr. Creech Jones: I am asking the East Africa High Commission for the information and will write to the hon. Member when I have received it.

Sir W. Wakefield: Is the Secretary of State aware that this company in the last year has made over 2,400 charters without accident, without uncompleted trips, and with no forced landings; and does not the right hon. Gentleman think that this efficient private enterprise ought to be allowed to operate for the public advantage of the Colony?

Mr. Creech Jones: This is a matter within the discretion of the High Commission in East Africa itself. I have no effective jurisdiction over it.

Mr. Lennox-Boyd: Will the inquiries of the right hon. Gentleman also be directed to whether any air corporation

like B.O.A.C. has made any representations to the Government in East Africa?

Oral Answers to Questions — TRINIDAD (STUDENTS, AIR PASSAGE)

Commander Maitland: asked the Secretary of State for the Colonies why eight agricultural students who were due to take a course at the Tropical College in Trinidad commencing in October were sent there by air at a cost to the country of approximately £1,408 when they were available for a sea passage.

Mr. Creech Jones: The decision to send these agricultural probationers by air was taken only because all efforts to secure sea passages by which they would reach Trinidad by October had failed. Normally such probationers are sent by sea, and it is hoped that the shipping difficulties which were encountered this year will not recur in future.

Commander Maitland: Would it not have been known for some time ahead that these probationers were going to the West Indies? Would it not have been possible to engage passages for them if it had been planned ahead?

Mr. Creech Jones: I made inquiries into that point and I assure the hon. and gallant Gentleman that such arrangements could not be made. The men did not finish their course at Cambridge until the middle of August. There was no loss of time so far as my Department was concerned.

Oral Answers to Questions — MALAYA (POLICE FORCE)

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for the Colonies whether he has yet considered the memorial from the Malayan police service regarding conditions in Malaya; and what reply he has sent or proposes to send.

Mr. Creech Jones: I informed the hon. and gallant Member of the nature of my reply to this petition in a letter dated 16th June and I have now sent him a copy of that letter.

Sir T. Moore: Could the Minister say what is the real trouble with the Malayan police service at present? Why are so many competent and senior officers being


retired or superseded at the time when it is most necessary to have their services?

Mr. Creech Jones: I have informed the House from time to time on that point and, as the hon. and gallant Gentleman is aware, an inquiry is about to go to Malaya to investigate this problem.

Mr. Gallacher: The trouble is that they are all in Malaya; they should be brought home.

Squadron-Leader Fleming: Would the right hon. Gentleman consider the case I have sent to him of a Malayan officer who has been retired without any reason being given, with no inquiry held, no board, nothing? Does he expect such conditions to encourage other people to join the service?

Mr. Creech Jones: I am quite unable to accept all that the hon. and gallant Member has said, but it is because of the dissatisfaction among large numbers of the Malayan police that this inquiry is being made.

Oral Answers to Questions — NIGERIA

Escravos Bar (Dredging)

Sir Ralph Glyn: asked the Secretary of State for the Colonies (1) how much work has been carried out to dredge the Escravos Bar off the Nigerian coast; whether he is aware that continued silting has now reduced the channel to under 13 feet; and whether any new decision has been reached as to the minimum depth of water needed for the passage of ocean vessels;
(2) whether he is satisfied that the crew of the Lagos harbour dredger "Ibadan" is suited to the work on the Escravos Bar; and that his technical staff is adequate to prevent the suspension of dredging in Lagos Harbour when work on the Escravos Bar is in progress.

Mr. Creech Jones: I am in consultation with the Governor of Nigeria on this matter and will write to the hon. Member.

Sir R. Glyn: Does my right hon. Friend realise that until this bar is dredged it adds greatly to the cost of

traffic out there and that it is a matter of extreme urgency?

Mr. Creech Jones: I appreciate both the urgency and importance of the matter.

Nurses (Regulations)

Mr. Sorensen: asked the Secretary of State for the Colonies, in view of existing regulations requiring nurses and other women officers employed by the Nigerian Government to resign on marrying and the requirement that nursing sisters should not be over 35 years of age, whether he will secure a modification of both these limitations.

Mr. Creech Jones: Established women officers are required to resign on marriage, but the Governor has power to waive this requirement in the public interest. The age limit for nursing candidates can always be relaxed in suitable cases.

Mr. Sorensen: But could the right hon. Gentleman say whether it is the invariable custom of the Governor to allow nurses on marriage to continue, and is he aware that, if that is not so, large numbers of nurses being trained here and in West Africa will on marriage at a fairly early date be lost to the Service?

Mr. Creech Jones: That is an important point and I propose to raise the matter with the Governor, but at the present time he is able to exercise his discretion, and that discretion has been exercised often to the advantage of the person who has applied for the relief.

Mr. Sorensen: Then are we to take it that the existing regulations which specifically laid down that a woman officer is required to resign her post on marriage will be withdrawn?

Mr. Creech Jones: No. It is a matter for consultation with the local Government and at present the Clause is waived at the discretion of the Governor.

Oral Answers to Questions — BRITISH GUIANA

Aerial Survey

Mr. Roland Robinson: asked the Secretary of State for the Colonies what arrangements he has made for an aerial survey of British Guiana.

Mr. Creech Jones: I hope that photography in British Guiana and the Caribbean area generally can be undertaken next year by the Royal Air Force in co-operation with my Directorate of Colonial Geodetic and Topographical Surveys. In the meantime a contract has been placed with a private firm on behalf of the Government of British Guiana for the air photography of 4,000 square miles covering the areas of the Colony which the British Guiana Government most urgently desire photographed.

Mr. Robinson: Can the right hon. Gentleman say whether the private firm are a British company and whether they are using British aircraft?

Mr. Creech Jones: I gather that it is a British company. It is called "The Air Survey Co. Ltd."

Mr. Robinson: Are they using British aircraft?

Mr. Creech Jones: I believe they are.

Rice Cultivation (Report)

Mr. R. Robinson: asked the Secretary of State for the Colonies whether the two American agricultural experts with experience of modern methods of rice cultivation and milling, who recently visited British Guiana under the technical assistance programme of the Economic Co-operation Administration, have now completed their assignment; whether he has received their report; and what action he proposes to take with regard to it.

Mr. Creech Jones: These experts have completed their visits to British Guiana but their report has not yet been received.

Oral Answers to Questions — HONG KONG (BRITISH ASSETS)

Mr. Carson: asked the Secretary of State for the Colonies when it will be possible to give an estimate of British assets in Hong Kong.

Mr. Creech Jones: As I stated on 2nd November in reply to my hon. Friend, the Member for Aston (Mr. Wyatt), the compilation of such figures on any reliable basis is a matter of considerable complexity and accurate results are very difficult to obtain: for these reasons I

regret that I am unable to give any indication of when it may be possible for such an estimate to be given.

Mr. Carson: While I realise that the value of Hong Kong cannot be fully assessed in pounds, shillings and pence, would the right hon. Gentleman consider in the future giving some estimate of what these assets are worth?

Mr. Creech Jones: It is difficult to prepare any reliable estimate. We may speculate about it, but I would not like to give a figure to the House which had no sound basis.

Mr. Driberg: Would my right hon. Friend agree that the most valuable British asset in Hong Kong would be the goodwill of the working people whose welfare was so disgracefully neglected by the friends of the hon. Member opposite?

Sir T. Moore: Another wicked case of Tory misrule!

Mr. Walter Fletcher: Does the right hon. Gentleman think that that asset is useful in repairing ships, which is very necessary in Hong Kong?

Oral Answers to Questions — GOLD COAST

Harbour Improvements

Brigadier Prior-Palmer: asked the Secretary of State for the Colonies what amount has been spent on harbour improvements at Accra of recent years; and what sum during the same period has been collected in the form of harbour-dues.

Mr. Creech Jones: I have asked the Governor for detailed information and will write to the hon. and gallant Member.

Constitution

Mr. Geoffrey Cooper: asked the Secretary of State for the Colonies why he has notified his acceptance of the main recommendations of the Coussey Committee Report, subject only to certain reservations, before giving an opportunity for the Report to be debated in this House.

Mr. Creech Jones: As I said in my despatch on the Report, I considered it advisable to let the Governor have immediately the views of His Majesty's Government on the main recommenda-


tions so as to help forward the examination of the Report in the Gold Coast. Some time must, however, elapse before the proposals are implemented and during this period Members will no doubt be able to raise the subject at a suitable opportunity.

Mr. Cooper: When matters of such fundamental importance to the constitution of a Colony are involved, as is the case with this Report prepared by the Coussey Committee on the Gold Coast, is it not important that an opportunity should be provided for a Debate in this House before the Government finally commit themselves or even accept all or any part of the Report?

Mr. Creech Jones: I have raised no objection to a Debate. It is a matter for Members themselves, through the usual channels, to obtain what facilities they think desirable and proper in the House.

Mr. Keeling: Can the right hon. Gentleman explain how it was that five days after he sent his despatch to the Governor accepting the recommendations, the Leader of another place said he would consider having a Debate before any commitments were entered into? Should not the Lord Privy Seal have been informed that the commitment had already been made?

Mr. Creech Jones: I think that the procedure followed in another place is precisely that which was followed in 1944 regarding the Gold Coast Constitution discussions. There has been no change in the procedure normally adopted.

Mr. Dumpleton: Is my right hon. Friend aware that his very prompt response to this Report has created a very favourable and helpful impression in the Gold Coast?

Mr. Creech Jones: Yes, and I think that on the whole the Gold Coast has received the Report with very great calmness and is giving it most serious consideration. It would be unfortunate if anything said in this House were to provoke difficulties.

Oral Answers to Questions — JAMAICA (METALS AGREEMENTS)

Mr. Skinnard: asked the Secretary of State for the Colonies whether he has

any statement to make on agreements reached between the Government of Jamaica and the Permanente Metals Incorporated of California in view of the extensive projects envisaged.

Mr. Creech Jones: I have no later information than that given to my hon. Friend on 30th August, 1948, but I am making inquiries of the Governor.

Mr. Skinnard: Would my right hon. Friend bear in mind that it is important to safeguard in any agreement the agricultural value of the land, leaving it as little disturbed as possible?

Mr. Creech Jones: Yes, I have impressed the Governor in regard to that aspect of the matter and he is keeping it in mind.

Oral Answers to Questions — NORTHERN RHODESIA (MAIZE PRICES)

Mr. Skinnard: asked the Secretary of State for the Colonies why the price paid to Europeans in Northern Rhodesia for a 200 lb. bag of maize is 30s. while Africans are paid 18s. for the same quantity grown and harvested by identical methods.

Mr. Creech Jones: This year the price paid by the Maize Control Board was 27s. per 200 lb. bag, regardless of the source of production. In addition, 3s. extra was paid if a new bag was used. In the case of Africans 18s. was paid directly and the balance of 9s. per bag was paid into the African Farming Improvement Fund. This fund is used to pay a good farming bonus of 15s. an acre to African farmers using improved methods based on rotational crops and soil conservation. Any balance remaining is used to finance the improvement of African farming and to raise the productivity of the soil. The European farmers, on the other hand, have to finance their own land improvements, conservation works, and roads.

Mr. Skinnard: Will my right hon. Friend bear in mind the importance of showing the African farmers the reasons for the two kinds of payments which in effect are made for their crop?

Mr. Creech Jones: I think the discrimination is more apparent than real, but I agree that it is important to get this across to the Africans.

Mr. Piratin: Can the Minister say whether the African farmers from whom the 9s. per bag is deducted, have consented to that deduction?

Mr. Creech Jones: All this is done in consultation with the local Africans who are on various district boards and provincial councils as well as on the Legislative Council.

Oral Answers to Questions — AFRICAN COLONIES

Forces (African Officers)

Mr. Skinnard: asked the Secretary of State for the Colonies what changes have been made in West Africa whereby more African officers will be commissioned; and what steps are being taken to implement a similar policy in East Africa.

Mr. Creech Jones: Africans who attain the required standards are now eligible for the grant of King's Commission in the West African Land Forces. The grant of local commissions to Africans in the East African Forces is at present being considered.

Mr. Skinnard: To what extent are commissions being made available to African cadets in the Royal Air Force?

Mr. Creech Jones: I should require notice of that question.

Health Visitors

Mr. Sorensen: asked the Secretary of State for the Colonies how many health visitors exist in the West African Colonies; and what encouragement is given to ensure that an increasing number of health visitors work in the country areas.

Mr. Creech Jones: The Governors of the West African territories have been asked to supply this information, and I will write to my hon. Friend.

Mr. Sorensen: Is my right hon. Friend aware that the number of health visitors in country areas is very small indeed, and will he, therefore, take some steps to encourage a larger number of health visitors to work in those areas?

Mr. Creech Jones: We will certainly do all we can to encourage an increase in the number of health visitors, but we

can only cut our coat according to our cloth.

Mr. Somerville Hastings: Are health visitors from these territories being trained in this country?

Mr. Creech Jones: Yes, we are receiving here people from all kinds of professions, and on the medical side increasing numbers are coming.

Cocoa Tree Disease

Mr. Sorensen: asked the Secretary of State for the Colonies what progress is being made in dealing with cocoa tree disease in West African Colonies; how far resistance to cutting down remains as strong as formerly; what other experimental methods of dealing with the disease have proved successful; and what is the anticipated production in the next 10 years compared with the best year of production.

Mr. Creech Jones: On the progress of the campaign I have nothing at the moment to add to the reply which I gave to the hon. Member for Twickenham (Mr. Keeling) on 19th October. Farmers are on the whole showing greater co-operation. No other method of dealing with the disease other than cutting out is known to be effective. As regards the last part of this Question, as my hon. Friend was informed on 13th July, it is not possible to forecast production over the next 10 years.

Mr. Sorensen: If my right hon. Friend knows approximately how many trees are being planted, would it not be possible at least to produce a rough estimate?

Mr. Creech Jones: It all depends, surely, on the cocoa disease, which we are doing our best to arrest, and it is quite impossible to make any estimates with regard to the future.

Mr. W. Fletcher: In view of the fact that over the next few years this disease may mean a very great loss of dollar earnings, and that in reality the campaign to secure native co-operation has failed, will the Colonial Secretary make special efforts to bring the matter forward again with much more urgency?

Mr. Creech Jones: The position is quite the reverse. The campaign is beginning to succeed. As, I think, there will be


a Debate on this problem in the House tomorrow night, I hope to be able to show the extent to which success is returning.

Groundnuts (Fertilisers)

Mr. Dodds-Parker: asked the Secretary of State for the Colonies what steps he is taking to supply fertilisers to African peasants growing groundnuts in Nigeria and the Gambia.

Mr. Creech Jones: The question of supplying fertilisers to groundnut cultivators either in Nigeria or in the Gambia did not arise until the value of the "placement" technique was recently demonstrated. Even now small supplies of phosphatic fertiliser in tablet form for demonstration purposes are being made only in Nigeria where the new technique is still in the late stages of development. The form in which the fertiliser will be made up has not yet been finally determined. No supplies of tablet fertiliser have yet been made available to the Gambia for distribution.

Mr. Dodds-Parker: Will the right hon. Gentleman make sure that every encouragement is given to the proper understanding and use of fertilisers throughout Africa?

Mr. Creech Jones: Yes, that is our intention.

Oral Answers to Questions — TANGANYIKA

Coastal Road (Survey)

Mr. Dodds-Parker: asked the Secretary of State for the Colonies to what extent a survey has been made of a coastal road between Dar-es-Salaam and Lindi in Tanganyika Territory; what is the estimated cost; and whether the project has been approved.

Mr. Creech Jones: A coast road which is passable during eight months of the year already exists. A survey of a higher standard road will be made as soon as staff is available. As the survey has not yet been made the second and third parts of the Question do not at present arise.

Coalfields (Development)

Captain Crowder: asked the Secretary of State for the Colonies what stage

has been reached in developing the coalfields in Tanganyika and Nyasaland; what is the distance to the nearest railway; and what is the distance from there by rail to the nearest port.

Mr. Creech Jones: The quality and extent of the coal deposits in parts of Tanganyika and in Nyasaland are still under investigation. The Nyasaland and the Tanganyika fields are between 250 and 300 miles from the nearest railway which runs down to the coast at Beira, a distance of some 500 miles.

Oral Answers to Questions — GAMBIA (POPULATION)

Captain Crowder: asked the Secretary of State for the Colonies the present rate of increase of the native population of Gambia; what is the estimated population 10 years hence; and how far will present local food supplies be able to satisfy the demand at that time.

Mr. Creech Jones: The estimated average rate of increase over the past 17 years has been about 3,000 per annum. At this rate the population will be slightly over 280,000 in 10 years' time. There is a small import of rice and other foodstuffs at present. The possibilities of increasing local production are constantly before the local Government and appropriate action taken.

Captain Crowder: Does the right hon. Gentleman think that in time Gambia will be able to export foodstuffs to this country?

Mr. Creech Jones: Yes, they will be able to do so, as they are now exporting groundnuts; they will be exporting eggs and other things also. In the meantime, a great deal of new work is proceeding with the mechanisation of rice cultivation and the development of fisheries.

Oral Answers to Questions — ROYAL NAVY

Temporary Engineer Officers

Mr. Willis: asked the Parliamentary Secretary to the Admiralty the number of temporary engineer officers, R.N.V.R., and temporary senior commissioned and commissioned engineers, R.N., still serving.

The Parliamentary and Financial Secretary to the Admiralty (Mr. John Dugdale): Nineteen temporary engineer officers, R.N.V.R., and 115 temporary senior commissioned and commissioned engineers, mechanicians and air engineers, R.N., are still serving. These numbers are, however, being rapidly reduced by normal wastage.

Mr. Willis: Is my right hon. Friend aware that there is a feeling that by retaining these ranks, which were designed to meet a wartime emergency, promotions, or permanent promotions, are being blocked?

Mr. Dugdale: In view of what my hon. Friend has just stated I think he will realise that the problem will not remain for long.

Submarines

Commander Maitland: asked the Parliamentary Secretary to the Admiralty if he can now make a statement indicating the progress made in improving the underwater efficiency of His Majesty's submarines.

Mr. Dugdale: Considerable progress has been made in improving the underwater efficiency of His Majesty's submarines. All operational submarines have now been fitted with the snort device, which enables them to cruise for periods of four weeks, or more, without having to come to the surface. As regards submerged speed, too, progress is satisfactory; but the hon. and gallant Member will appreciate that I cannot go into details.

Commander Maitland: Is the right hon. Gentleman satisfied that the progress of our submarines is keeping up with that of foreign countries? Can he at least go as far as, or elaborate on, what his noble Friend said at a recent dinner?

Mr. Dugdale: Yes, I can state that so far as we know we have run submarines at as fast a speed as any other nation.

Sir Ronald Ross: Is the Navy able to follow the investigations which take place in the United States Navy of one submarine against another, both submerged?

Mr. Dugdale: Naturally we could follow the tests carried out by the United States, or any other Navy available to us.

Court Martial Procedure (Report)

Mr. Swingler: asked the Parliamentary Secretary to the Admiralty what progress has been made by the Committee on Naval Courts Martial; and when a final report is expected.

Mr. Dugdale: My noble Friend has consulted Mr. Justice Pilcher, who has informed him that the drafting of the first report of the Naval Court Martial Committee is now well advanced, and that he hopes to be able to present it in the course of the next few weeks. As my hon. Friend is aware from my reply to his Question on 18th May last, the first report will deal with naval court martial procedure alone, and a final report on the other aspects of the administration of justice in the Royal Navy cannot be expected for some months.

Mr. Swingler: Is my right hon. Friend bearing in mind the promise of the Minister of Defence that action will be taken on these reports within the lifetime of this Parliament; and is he aware that action on the Lewis Report is being delayed until this Committee has completed its work?

Mr. Dugdale: I am certainly bearing in mind, as I said I would, the statement made by my, right hon. Friend the Minister of Defence.

Fleet Returns (Publication)

Sir Ronald Ross: asked the Parliamentary Secretary to the Admiralty whether the publication of the Annual Report on Fleets will now be resumed.

Mr. Dugdale: No, Sir.

Sir R. Ross: Is the right hon. Gentleman aware that it is impossible to follow the state of affairs in the Navy, which is withering away by ships being sold or given to other navies, and that we cannot follow how the Navy is decreasing without this return? Why is it not published, as it used to be published before the war?

Mr. Dugdale: I really cannot accept the statement, nor do I think the hon. Gentleman really means it, that the Navy is "withering away." The Navy is in a perfectly fit and proper state, but we do not intend to publish Fleet returns until


other nations publish information about their fleets as was done before the war.

Mr. Joynson-Hicks: Is the right hon. Gentleman aware that the lack of knowledge concerning our Fleet, which must result from the absence of this publication, does damp down ardour for the Fleet in the public mind? Will not he encourage people to take an interest in their Fleet by giving them more information about it?

Mr. Dugdale: No, Sir, I think the public have every confidence in the strength of their Fleet and also in the officers and ratings, whatever anybody on the other side of the House may say.

Mr. Henry Usborne: If all other nations take the view that they will not publish information until other nations do likewise, is it likely that any nation will ever be able to publish it?

Mr. Dugdale: We have stated that we will do so when other nations do. If they said the same, I have no doubt it would be published.

Mr. Wilson Harris: If it was thought proper to publish information about our Navy before the war, when there were formidable hostile naval Powers, why cannot it be done now, when there is no formidable hostile naval Power?

Mr. Dugdale: That was not the point. Before the war all other nations, including Germany, published these figures. This time this information is not published by various other nations.

Oral Answers to Questions — TELEVISION

Extension Programme

Air-Commodore Harvey: asked the Postmaster-General if he will make a statement on his plans for extending television services to other parts of the country.

The Postmaster-General (Mr. Wilfred Paling): The provision of a nation-wide television service is being pushed ahead as fast as national economics permit. The B.B.C. has submitted a plan which has been approved by the Government, but it is, of course, subject to that qualification. The aim is to bring television

within the reach of over half the population in less than two years and about 80 per cent. of the population by the end of 1954.
The plan provides for five high-power and five low-power stations as follows: High-Power: Alexandra Palace, London; Sutton Coldfield; Holme Moss, near Huddersfield; Central Scotland; Bristol Channel area (one, or possibly two stations). Low - Power: Tyneside; Southampton; Northern Ireland; Aberdeen; Plymouth—giving a coverage to a population of something less than 40 million.
The Sutton Coldfield station will open on 17th December of this year and it is hoped to open the Holme Moss station by the middle of 1951. The Scottish station, the Bristol Channel station and the low-power stations will be provided thereafter as soon as circumstances permit.

Air-Commodore Harvey: Does the right hon. Gentleman realise that by accelerating this programme he would assist British exports considerably? Does he mean by his answer that the unexpended balance on the capital account of more than £2,300,000 is going to be expended in the time?

Mr. Paling: Is the hon. and gallant Member referring to the accounts of the B.B.C.?

Air-Commodore Harvey: Yes.

Colonel Gomme-Duncan: Can the right hon. Gentleman say why there should be so much delay before the Scottish station is established?

Mr. Paling: This programme, subject to the qualifications I have already admitted, rather doubles the progress.

Colonel Gomme-Duncan: Then why not alter the programme?

Sir R. Ross: Why is Northern Ireland getting a low-power station?

Squadron-Leader Fleming: Does the answer mean that Manchester is not to have a television service before Christmas, 1951?

Mr. Paling: I have not given a date in 1951. I said 1951, but did not give a particular month.

Mr. Erroll: Was this programme agreed to after the recently announced capital cuts? Is this the real programme, or is it to be subject to the capital cuts?

Mr. Paling: No, there are considerations arising out of the capital cuts which have to be taken into account.

Mr. Marples: asked the Postmaster-General whether it is now intended to revise the programme for the extension of television as announced by the Lord President of the Council on 28th September, 1949.

Mr. Wilfred Paling: No, Sir, not as regards the scope of the programme, but I cannot say at this stage whether its completion will be delayed by the need for economy in capital investment.

Mr. Marples: When does the right hon. Gentleman expect to be able to announce the precise dates of the opening of these stations?

Mr. Paling: Within a few weeks.

Yorkshire and Lancashire

Dr. Broughton: asked the Postmaster-General how the scheme for television in Yorkshire and Lancashire will be affected by the economy measures recently announced.

Mr. Wilfred Paling: I hope not at all.

Programme Exchanges

Air-Commodore Harvey: asked the Postmaster-General what negotiations have taken place for the interchange of television programmes with European countries; and if he will make a statement.

Mr. Wilfred Paling: The only country concerned at present is France. There is a standing liaison committee, representing the B.B.C. and the French broadcasting authority for promoting programme exchanges. So far these have been limited to films, mainly news reels; interchange of programme producers is under discussion.

Air-Commodore Harvey: Is the right hon. Gentleman thinking of extending these facilities to the Netherlands and other West European Powers?

Mr. Paling: Yes, if we can.

Mr. Erroll: Will the right hon. Gentleman consider the recording of complete programmes other than the news reels so that these can be sold to aid our export drive?

Mr. Paling: I will look into that suggestion.

Holme Moss Station

Mr. Marples: asked the Postmaster-General what month during 1951 does he expect to complete and open the Holme Moss television transmitting station.

Mr. Wilfred Paling: The B.B.C. hopes to open this station by the middle of 1951 but it is too early yet to say in which month.

Mr. Marples: Does the right hon. Gentleman mean to say that he entered into a commitment to spend public money without having a completion date inserted in the contract?

Oral Answers to Questions — TELEPHONE SERVICE

Installations

Mr. T. Reid: asked the Postmaster-General at what rate per annum telephones were installed before the war; and at what rate they are being installed at present.

Mr. Wilfred Paling: Three hundred and seventy-seven thousand six hundred and thirty-one telephones were installed during the year ended 31st March, 1939, this being close to the average for the preceding three years. The figure for the 12 months ending 30th September last was 600,401.

Mr. Reid: In view of the very satisfactory state of affairs which the answer reveals, will my right hon. Friend use his influence to get transferred to Swindon a considerable number of these telephones, as they are badly needed there?

Lieut.-Commander Gurney Braithwaite: Can the Postmaster-General say whether the second figure he read out includes instruments operating on party lines, to the great discomfort of individual subscribers?

Mr. Paling: Yes.

Mr. Lipson: Can the right hon. Gentleman also give the figures of unsatisfied


applications for the two periods and say when the considerable arrears will be made up?

Mr. Paling: I stated last week that more than half a million were waiting. I would not like to say that all are dissatisfied, but all are anxious.

Emergency Number

Colonel Dower: asked the Postmaster-General if he will state what is the result of his inquiries regarding the possibility of making the emergency telephone number 999 luminous, so as to facilitate this call being made in the dark.

Mr. Wilfred Paling: Inquiries have now reached the stage where materials are being subjected to field trials and until these are completed it is not possible to say whether a practical solution has been found.

Colonel Dower: While thanking the right hon. Gentleman, I should like to ask him to bear in mind that these trials have been going on for a long time since he said that he was sympathetic to the idea, and will he see whether he cannot bring them to a conclusion soon?

Mr. Paling: The sooner they are finished the better I shall be pleased.

Oral Answers to Questions — FOOD SUPPLIES

Margarine

Mr. Boyd-Carpenter: asked the Minister of Food what is the average period between the manufacture and consumption of margarine.

The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): About 3½ weeks elapse between manufacture and sale in the shops.

Mr. Boyd-Carpenter: Is not that approximately a period three times longer than before the war, and is it this delay which gives to the margarine that distinctive colour which makes it so easy to distinguish from butter?

Dr. Summerskill: The last part of that Question is a little stale. The answer to the first part is that the hon. Member is wrong. The time which elapsed was about two weeks. It is now longer because grocers keep a reserve in stock a

little longer in order to ensure that the ration is honoured.

Captain Crowder: Can the right hon. Lady say whether this margarine is mixed with butter to make up what is called "standard butter," because the butter nowadays is very nasty?

Air-Commodore Harvey: Will the right hon. Lady give an assurance that the young twins whom she was nursing in a recent photograph were not fed on this margarine?

Dr. Summerskill: They were fed on welfare food supplied free by the Ministry of Food, and I think they are a credit to the Labour Government.

Colonel Gomme-Duncan: Would not the right hon. Lady agree that those healthy parents who were brought up under "Tory misrule" are producing the healthy children now?

Mr. Godfrey Nicholson: Surely it is an advance in physiology if the whole of the Labour Government can be responsible for them?

Dutch Mutton

Mr. Boyd-Carpenter: asked the Minister of Food what proportion of the consignment of approximately 2,000 carcases of Dutch mutton brought by him to this country towards the end of September has been issued as part of the meat ration; what proportion will be so issued; what has happened to the rest; and what was the total cost of this consignment.

Dr. Summerskill: None of this particular consignment was issued for the ration, but five tons was used for making meat products. The rest was condemned. We cannot assess the cost until the reason and liability for the loss is determined.

Mr. Boyd-Carpenter: May I take it that the right hon. Lady is conducting vigorous investigations into this very considerable loss, and that she will make a statement to the House when those investigations are completed?

Dr. Summerskill: We are in discussion with the Dutch Government. The hon. Member will realise that the Dutch Government were responsible for the shipment of this meat, and it was guaranteed that it would be in a fresh condition when it arrived.

Christmas Rations

Colonel Ropner: asked the Minister of Food whether he will now make a statement with regard to the extra rations of food which will be made available for Christmas.

Dr. Broughton: asked the Minister of Food what increase of rationed foods he intends allowing for Christmas.

Mr. Janner: asked the Minister of Food whether he will grant an extra bonus of sweets during the Christmas period.

Dr. Summerskill: I cannot add to the reply given by my right hon. Friend to the hon. and gallant Member for Macclesfield (Air-Commodore Harvey) on 2nd November.

Colonel Ropner: Can the right hon. Lady say when she anticipates that she will be able to make an announcement?

Dr. Summerskill: My right hon. Friend said that he was not quite ready but he will be shortly. I cannot give the hon. Member a date.

Dr. Broughton: Is my right hon. Friend aware that now is the time when housewives would like to know so that they could be planning? Christmas is next month, after all.

Tallow (Prices)

Major Legge-Bourke: asked the Minister of Food what was the purpose of his Department in raising the price offered for good colour mixed Australian tallow, sub-mark F, in October, 1948, when American and European prices were falling to levels below the price previously offered by his Department; why the price was reduced on 1st October, 1949, despite the fact that devaluation caused a rise in American prices; and what has been the effect of each change on supplies in the United Kingdom.

Dr. Summerskill: My Department does not buy tallow from either North America or from Europe. Prices from remaining non-dollar sources were rising in October, 1948, and we had to raise our buying prices in Australia and elsewhere in order to secure supplies. Prices from these sources have dropped in 1949 and we can now buy more cheaply. Shipments of Australian tallow of all descriptions increased from about 2,300 tons in 1947–48

to about 9,600 tons in 1948–49. It is too early to forecast shipments during the current season.

Major Legge-Bourke: Does not the right hon. Lady realise that the point of the original Question was the price being offered by the Americans, not the price which the Americans would charge us if we tried to buy it from them.

Dr. Summerskill: The hon. and gallant Member is a little confused. I shall be only too happy to explain these tallow negotiations if he likes to come and see me. We do not buy from the United States because they want dollars and that is why it is not relevant for him to compare United States prices with soft currency prices.

Maize (Irish Republic)

Sir R. Ross: asked the Minister of Food what was the average price of maize when this country lent Eire a quantity of maize; and what was the corresponding price when this quantity was returned.

Dr. Summerskill: The average c.i.f. price of all maize imported in the last three months of 1948, during which this grain was lent was £32 19s. 5d. per ton. Repayment of the loan was made between 15th January and 6th May, 1949. The average c.i.f. prices of all maize imported into the United Kingdom in the first and second quarters of 1949 were £30 15s. 9d. and £19 18s. 5d., respectively.

Sir R. Ross: Was not the net excess of the amount paid by this country for maize lent to Eire a very considerable sum more than the amount paid by Eire for the maize which was repaid?

Dr. Summerskill: The Irish Republic bought the maize a little cheaply but this country did not lose anything either in money or in maize.

Pig Products (Irish Republic)

Sir R. Ross: asked the Minister of Food how much bacon or other pig products have been received from the Irish Republic this year.

Dr. Summerskill: About 1,230 tons.

Divisional Local Offices

Mr. Turton: asked the Minister of Food if he will now give details of the


reorganisation and concentration of divisional local offices, and the changes in controls that it is anticipated will effect a saving of £1,700,000.

Dr. Summerskill: I am sending the hon. Member a copy of a Press announcement issued by my Department on 28th October which gives details of the more important changes.

Oral Answers to Questions — B.B.C. EXTENSION PLANS

The following Question stood upon the Order Paper in the name of MR. MARPLES:

61. To ask the Postmaster-General what cuts are now proposed in the building and extension plans of the B.B.C. as have required his approval.

Mr. Marples: May I point out that the last five words should read "which have received his approval."

Mr. Wilfred Paling: The B.B.C. does not require my approval for its building plans. As regards the recent capital investment cuts, the Corporation does not propose to make any changes in the programme of television extension already announced. It is too early to say on which other parts of the B.B.C.'s capital programme savings may have to be made.

Oral Answers to Questions — POST OFFICE

Late Posting (Mail Trains)

Mr. Keeling: asked the Postmaster-General why the times of late posting on mail trains at London railway stations, which were restored 2¼ years ago, and

LATE FEE LETTERS


Latest times for posting letters prepaid with a late fee of ½d. (in addition to ordinary postage) direct into mail sorting carriages at London main line termini


Station
Mail train
Mondays to Fridays
Saturdays
Sundays




p.m.
p.m.
p.m.


Kings Cross
…
Kings Cross Station to Edinburgh
…
8.20
8.20
8.20


Euston
…
Euston Station to Aberdeen
…
8.30
—
8.30


Euston Station to Perth
…
—
8.30
—


Paddington
…
Paddington Station to Penzance
…
10.10
—
10.10


Paddington Station to Plymouth
…
—
10.10
—


Liverpool Street
…
Liverpool Street Station to Peterborough
…
10.25
—
10.25


Liverpool Street Station to Norwich
…
10.25
—
10.25


Waterloo
…
Waterloo Station to Dorchester
…
10.30
10.30
9.54


Kings Cross
…
Kings Cross Station to Edinburgh
…
10.30
—
10.30


Euston
…
Euston Station to Carlisle
…
10.50
—
10.50


London Bridge
…
London Bridge Station to Dover
…
11.50
—
9.5

which are about four hours later than the last collection from pillar boxes, have never been published in the Post Office Guide; and whether he will publish them in the OFFICIAL REPORT.

Mr. Wilfred Paling: A general notification of the facility appears in the Supplement which was issued with the July, 1949, edition of the Post Office Guide. The Guide is not a suitable publication in which to give specific information of detailed posting times, which are mainly of local interest. A full statement of these posting times will appear in a publication on postal services in London to be issued next year. Meanwhile, the information is being circulated in the OFFICIAL REPORT.

Mr. Keeling: In view of the gloomy record of suppression of pre-war postal services would one not have expected the Post Office to give this gleam of light the widest publicity instead of waiting for 2¼ years?

Mr. Paling: We gave the matter publicity at the time. Whether it was sufficient or not is a matter of opinion.

Mr. Grimston: Is it not a fact that this service was re-introduced 2½ years ago and that it was not until last July that an announcement of it was made in a supplement to the Post Office Guide? Is that an indication of the sort of publicity which is being given to Post Office services?

Mr. Paling: I think that was due to the fact that publication of the previous guide had been begun just before this happened.

Following is the information:

Parishes, Hampshire (Post-town)

General Sir George Jeffreys: asked the Postmaster-General for what reasons Bentley and Grayshott parishes in the county of Hampshire have as their post-town Farnham, so that letters have to be addressed Farnham, Surrey; whether he is aware of the confusion so caused as these parishes are, for all local government, local taxation and police purposes, in the county of Hampshire; and whether he will cause Hampshire post-towns to be substituted for Farnham in these cases.

Mr. Wilfred Paling: The post-towns for Bentley and Grayshott are Farnham and Hindhead, respectively, because this arrangement has been considered to be in the best postal interests of the residents. I am not aware that the present postal arrangements for the areas concerned cause any confusion or inconvenience. The position is being reviewed and I will write to the hon. and gallant Member as soon as possible.

Sir G. Jeffreys: Will the right hon. Gentleman take it from me that it has caused confusion? Is he aware that the Ministry of Fuel and Power caused these parishes to be put into the region of Tunbridge Wells for their purposes—they hardly know where Tunbridge Wells is—and will he consider, first, the convenience of the inhabitants rather than the convenience of the Post Office.

Mr. Paling: I said I am reviewing the situation, and I will let the hon. and gallant Member know.

Mr. Nicholson: While not accepting my hon. and gallant Friend's estimate of the intelligence of his constituents—I am rather hurt by this Question—I have the honour to be associated with Farnham, and surely Farnham—

Mr. Speaker: The hon. Member is not asking a question.

Mr. Keeling: Is the Postmaster-General aware that the confusion in Farnham is nothing compared with the confusion in Twickenham, which is in no less than eight different postal areas?

Staff Associations (Recognition)

Mr. Boyd-Carpenter: asked the Postmaster-General when he abrogated

the rule of his Department entitling associations of workers numbering 40 per cent. of the organised workers in a grade to recognition; and in what form and to whom this abrogation was communicated.

Mr. Wilfred Paling: I have not abrogated any rule. As I recently informed the hon. Member, I am reviewing the whole situation.

Mr. Boyd-Carpenter: May I ask the right hon. Gentleman if it is not a fact that this rule has existed for some time in his Department, and that notwithstanding that, he has refused to apply it, though he accepts the figures in the case of the Engineering Officers Telecommunications Association? Can the right hon. Gentleman therefore distinguish between abrogating a rule and not applying it when it is politically inconvenient?

Mr. Paling: It is true that the rule has been in operation a long time and also that circumstances have cropped up which make it possible to review it.

Mr. Quintin Hogg: Is not it a fact that the only circumstance which cropped up was the desire of the right hon. Gentleman to suppress a union which is not to his own liking?

Mr. Henry Strauss: Whatever may be the inconvenience of dealing with several unions, will it not cause far more inconvenience if the right hon. Gentleman refuses recognition to a trade union which represents 40 per cent. of the workers concerned?

Mr. Paling: That remains to be seen.

Mr. W. J. Brown: May I ask in what respect conditions have changed as between the date when this scheme of recognition of 40 per cent. was adopted by agreement within the Post Office and the conditions today? In what respect has there been any change whatever?

Mr. Paling: A lot of conditions have changed in the last 20 years.

Mr. Boyd-Carpenter: I beg to give notice, in view of the fact that the non-application of this long-standing rule in one particular case really requires further investigation, that I shall endeavour to raise the matter on the Adjournment.

Oral Answers to Questions — ROYAL AIR FORCE

Overseas Service (Wives and Families)

Mr. Basil Nield: asked the Secretary of State for Air what arrangements exist for enabling wives and families of other ranks in the Royal Air Force to join their husbands serving overseas; and what steps he will take to improve the position.

The Secretary of State for Air (Mr. Arthur Henderson): Wives and families are notified to join airmen serving overseas as married quarters or suitable private accommodation become available. Recently there has been some delay in providing passages to the Middle East and Far East, due partly to an increase in the number of families called forward and partly to increased demands on cabin accommodation in connection with the movement of forces to the Far East. We are now moving some families by air, and I am glad to say that the shipping delays are being reduced.

Mr. Nield: Would the right hon. and learned Gentleman say whether every possible use is being made of aircraft in order to avoid the delays which he admits are taking place?

Mr. Henderson: Yes, Sir.

Rescue Craft

Sir Stanley Reed: asked the Secretary of State for Air how many rescue craft are maintained round the coasts of Great Britain; what is the personnel engaged; and the annual cost to the latest ascertainable date.

Mr. A. Henderson: The Royal Air Force maintains no rescue craft as such. The second and third parts of the Question do not therefore arise. There are, however, 52 small craft, including pinnances, seaplane tenders and launches, in position at 16 places round the coasts of Great Britain. These craft are engaged on various duties, such as target towing and range safety, but are linked to the air rescue organisation and are called out for rescue work when required.

Sir S. Reed: May I ask the Minister if he will look into the question again and see if this substantial personnel could be more profitably occupied, and whether

the target towing practice, on which some of them are almost entirely engaged, could be more easily and profitably undertaken by tugs lying idle in those harbours?

Mr. Henderson: I am afraid that so long as we have an Air Force we have to see that it receives training, and so long as it receives training we have to take all the precautions for which these craft are responsible.

Oral Answers to Questions — AIR ACCIDENT, PRESTWICK (REPORT)

Mr. Emrys Hughes: asked the Parliamentary Secretary to the Ministry of Civil Aviation when the report on the inquiry into the accident to the Dutch airliner near Prestwick will be available.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): The report is now being printed and will be published shortly.

Mr. Hughes: Is the Minister aware that this report, which contains certain criticisms of Prestwick, was published in Holland about a month ago, and can he arrange that in future these reports are published here first?

Mr. Lindgren: No, Sir, it has not been published in Holland. It will in fact be published simultaneously by the Dutch Government and ourselves.

Oral Answers to Questions — GERMANY

Displaced Persons

Mr. Stokes: asked the Secretary of State for Foreign Affairs what arrangements have been made for the final settlement of the hard core of displaced persons who remain in Germany, amounting to approximately 180,000.

The Under-Secretary of State for Foreign Affairs (Mr. Mayhew): While the International Refugee Organisation will continue to make every effort to resettle those displaced persons who are not usually eligible for current emigration schemes, there will undoubtedly be at least 100,000 who will have to remain in Germany. These, while continuing to enjoy the protection of the Occupying Powers, will become the responsibility of the German authorities. Wherever possible they will be assisted to become


self-supporting and institutional care will be provided for those refugees who are incapacitated.

Mr. Stokes: May I ask my hon. Friend whether he considers that one solution to this unhappy problem would be to get those Governments to whose countries the young people—the breadwinners—have in the main gone, to take also the old people, the aged and sick who have been left behind? Much of this hard core consists of persons of that kind.

Mr. Mayhew: That would be a desirable solution and one which we have constantly advocated. The I.R.O. does press that, but, unfortunately, we have to be guided by what is practicable and what the receiving country will take.

Mr. Scollan: Does the answer of my hon. Friend to the original Question mean that we are taking responsibility for 80,000 out of the 180,000 mentioned in the original Question? He said that the new German Government would be responsible for 100,000. Does that mean that we are responsible for the 80,000?

Mr. Mayhew: I do not necessarily accept the figure in the original Question.

Mr. Sydney Silverman: My hon. Friend says they are the responsibility of the German authorities. Is that quite right? Are they not the responsibility of the I.R.O.?

Mr. Mayhew: I am considering the situation when the I.R.O. is wound up. In that situation they will be the responsibility of the German authorities with the protection of the occupying authority.

Mr. Stokes: Is the Minister making really forceful representations to the other Governments concerned to get them to adopt the form of policy suggested in my supplementary question?

Mr. Mayhew: We have pressed it in the past, but the first thing to press is that countries shall take refugees of some kind. Unfortunately it has not been possible in many cases for countries to take any refugees.

Detained British Soldiers, Soviet Zone

Mr. Blackburn: asked the Secretary of State for Foreign Affairs what further steps he has now taken to secure the release by the Soviet authorities of the

British soldiers detained by them in Berlin.

Mr. Mayhew: I presume my hon. Friend refers to action taken since his Question of 19th October. Following an inquiry by the British authorities of 14th October Corporal Schultz, W.R.A.C., has been released and has returned to her unit. Private Stuart has been interviewed by a British officer and has stated that he does not wish to return. In a letter of 20th October the British Chief of Staff again raised with the Soviet Chief of Staff the question of the return of Corporal Garrick and Privates Kelly, Moncaster, Baker, Crossley, Eggleton and Tirell. On 3rd November the General Officer Commanding British Troops, Berlin, also addressed a letter about the case of Private Tirell to the Soviet Garrison Commander.

Mr. Blackburn: In the view of the fact that there are seven British soldiers still detained by the Soviet authorities, will my hon. Friend please consider whether this matter ought not now to be taken up directly by the British Foreign Office with the Soviet authorities, because we have no intention of allowing British subjects to be treated in the disgraceful way in which the Poles are now being treated?

Mr. Mayhew: We will certainly take any practical steps, but I do not think that we should jump to the conclusion that these men are being detained against their will.

Oral Answers to Questions — NORTH ATLANTIC TREATY (ITALY)

Mr. Emrys Hughes: asked the Secretary of State for Foreign Affairs if he will make a statement on the obligations we have undertaken to Italy under the Atlantic Pact.

Mr. Mayhew: I would refer my hon. Friend to the text of the North Atlantic Treaty and in particular to Article 5. Italy, as a full and equal partner in the Treaty, will benefit from the mutual undertakings it contains in the same way as all the other signatories.

Mr. Hughes: Can the Minister state how this is affected by the recent report under the Foreign Secretary's direction which appeared in the American Press?

Mr. Mayhew: I am not aware of that report.

Mr. Gallacher: May I ask if, in view of the statements made by the Minister that Italy in connection with the Atlantic Pact has been throwing bricks at him, we can take it that there is no further room for stabbing him in the back?

BILL PRESENTED

PUBLIC WORKS LOANS BILL

"to grant money for the purpose of certain local loans out of the Local Loans

Fund, and for other purposes relating to local loans," presented by Mr. Glenvil Hall; read the First time; to be read a Second time Tomorrow, and to be printed. [Bill 200.]

BUSINESS OF THE HOUSE

Motion made, and Question put,
That the Proceedings on Government Business be exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House)."—[Mr. H. Morrison.]

The House divided: Ayes, 272; Noes, 115.

Division No. 274.]
AYES
[3.34 p.m.


Acland, Sir Richard
Dugdale, J. (W. Bromwich)
Jay, D. P. T.


Adams, Richard (Balham)
Dumpleton, C. W.
Jeger, G. (Winchester)


Albu, A. H.
Dye, S.
Jenkins, R. H.


Allen, A. C. (Bosworth)
Ede, Rt. Hon. J. C.
John, W.


Allen, Scholefield (Crewe)
Edwards, Rt. Hon. Sir C. (Bedwellty)
Johnston, Douglas


Alpass, J. H.
Edwards, Rt. Hon. N. (Caerphilly)
Jones, Rt. Hon. A. C. (Shipley)


Anderson, A. (Motherwell)
Edwards, W. J. (Whitechapel)
Jones, D. T. (Hartlepool)


Attewell, H. C.
Evans, Albert (Islington, W.)
Kendall, W. D.


Austin, H. Lewis
Evans, E. (Lowestoft)
Kenyon, C.


Awbery, S. S.
Evans, John (Ogmore)
Key, Rt. Hon. C. W.


Ayles, W. H.
Evans, S. N. (Wednesbury)
Kinghorn, Sqn.-Ldr. E.


Ayrton Gould, Mrs. B.
Fairhurst, F.
Kinley, J.


Balfour, A.
Farthing, W. J.
Kirkwood, Rt. Hon. D.


Barton, C.
Fernyhough, E.
Lang, G.


Bechervaise, A. E.
Fletcher, E. G. M. (Islington, E.)
Lavers, S.


Bellenger, Rt. Hon. F. J.
Follick, M.
Lawson, Rt. Hon. J. J.


Berry, H.
Foot, M. M.
Lee, Miss J. (Cannock)


Bing, G. H. C.
Forman, J. C.
Leonard, W.


Blackburn, A. R.
Fraser, T. (Hamilton)
Leslie, J. R.


Blyton, W. R.
Freeman, Peter (Newport)
Lever, N. H.


Boardman, H.
Gallacher, W.
Lewis, T. (Southampton)


Bowen, R.
George, Lady M. Lloyd (Anglesey)
Lindgren, G. S.


Braddock, Mrs. E. M. (L'pl, Exch'ge)
Gilzean, A.
Lindsay, K. M. (Comb'd Eng. Univ.)


Braddock, T. (Mitcham)
Glanville, J. E. (Consett)
Lipson, D. L.


Brook, D. (Halifax)
Granville, E. (Eye)
Lipton, Lt.-Col. M.


Broughton, Dr. A. D. D.
Greenwood, Rt. Hon. A. (Wakefield)
Longden, F.


Brown, George (Belper)
Greenwood, A. W. J. (Heywood)
Lyne, A. W.


Brown, T. J. (Ince)
Grey, C. F.
McAdam, W.


Burden, T. W.
Grierson, E.
McGhee, H. G.


Burke, W. A.
Griffiths, D. (Rother Valley)
Mack, J. D.


Butler, H. W. (Hackney, S.)
Griffiths, Rt. Hon. J. (Llanelly)
McKay, J. (Wallsend)


Byers, Frank
Griffiths, W. D. (Moss Side)
McKinlay, A. S.


Chamberlain, R. A.
Gunter, R. J.
McLeavy, F.


Champion, A. J.
Guy, W. H.
MacPherson, Malcolm (Stirling)


Chetwynd, G. R.
Haire, John E. (Wycombe)
Mallalieu, J. P. W. (Huddersfield)


Cluse, W. S.
Hale, Leslie
Mann, Mrs. J.


Cobb, F. A.
Hall, Rt. Hon. Glenvil
Manning, Mrs. L. (Epping)


Cocks, F. S.
Hamilton, Lieut.-Col. R.
Marquand, Rt. Hon. H. A.


Coldrick, W.
Hardy, E. A.
Mathers, Rt. Hon. George


Collindridge, F.
Harris, H. Wilson (Cambridge Univ.)
Mayhew, C. P.


Collins, V. J.
Hastings, Dr. Somerville.
Mellish, R. J.


Colman, Miss G. M.
Henderson, Rt. Hon. A. (Kingswinford)
Middleton, Mrs. L.


Cooper, G.
Henderson, Joseph (Ardwick)
Mikardo, Ian


Corbet, Mrs. F. K. (Camb'well, N. W.)
Herbison, Miss M.
Mitchison, G. R.


Corlett, Dr. J.
Hobson, C. R.
Monslow, W.


Cove, W. G.
Holman, P.
Moody, A. S.


Cullen, Mrs.
Holmes, H. E. (Hemsworth)
Morley, R.


Daines, P.
Horabin, T. L.
Morris, Lt.-Col. H. (Sheffield, C.)


Dalton, Rt. Hon. H.
Houghton, Douglas
Morris, P. (Swansea, W.)


Davies, Edward (Burslem)
Hoy, J.
Morrison, Rt. Hon. H. (Lewisham, E.)


Davies, Harold (Leek)
Hubbard, T.
Moyle, A.


Davies, Haydn (St Pancras, S. W.)
Hudson, J. H. (Ealing, W.)
Murray, J. D.


Davies, R. J. (Westhoughton)
Hughes, Emrys (S. Ayr)
Nally, W.


Davies, S. O. (Merthyr)
Hughes, Hector (Aberdeen, N.)
Naylor, T. E.


Deer, G.
Hughes, H. D. (W'lverh'pton, W.)
Neal, H. (Claycross)


Delargy, H. J.
Hynd, J. B. (Attercliffe)
Nicholls, H. R. (Stratford)


Dobbie, W.
Irvine, A. J. (Liverpool)
Noel-Baker, Capt. F. E. (Brentford)


Dodds, N. N.
Irving, W. J. (Tottenham, N.)
Oldfield, W. H.


Driberg, T. E. N.
Isaacs, Rt. Hon. G. A.
Oliver, G. H.




Paling, Rt. Hon. Wilfred (Wentworth)
Shurmer, P.
Wallace, G. D. (Chislehurst)


Paling, Will T. (Dewsbury)
Silverman, S. S. (Nelson)
Wallace, H. W. (Walthamstow, E.)


Pannell, T. C.
Simmons, C. J.
Warbey, W. N.


Parker, J.
Skeffington-Lodge, T. C.
Watkins, T. E.


Parkin, B. T.
Skinnard, F. W.
Watson, W. M.


Paton, Mrs. F. (Rushcliffe)
Smith, C. (Colchester)
Webb, M. (Bradford, C.)


Pearson, A.
Smith, Ellis (Stoke)
Weitzman, D.


Peart, T. F.
Smith, H. N. (Nottingham, S.)
Wells, P. L. (Faversham)


Piratin, P.
Smith, S. H. (Hull, S. W.)
Wells, W. T. (Walsall)


Poole, Cecil (Lichfield)
Snow, J. W.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Popplewell, E.
Solley, L. J.
White, H. (Derbyshire, N. E.)


Porter, E. (Warrington)
Sorensen, R. W.
Whiteley, Rt. Hon. W.


Porter, G. (Leeds)
Sparks, J. A.
Wigg, George


Price, M. Philips
Stewart, Michael (Fulham, E.)
Wilkes, L.


Proctor, W. T.
Stokes, R. R.
Wilkins, W. A.


Pryde, D. J.
Stubbs, A. E.
Willey, F. T. (Sunderland)


Randall, H. E.
Summerskill, Rt. Hon. Edith
Willey, O. G. (Cleveland)


Ranger, J.
Swingler, S.
Williams, D. J. (Neath)


Rankin, J.
Sylvester, G. O.
Williams, J. L. (Kelvingrove)


Reid, T. (Swindon)
Symonds, A. L.
Williams, Ronald (Wigan)


Richards, R.
Taylor, H. B. (Mansfield)
Williams, Rt. Hon. T. (Don Valley)


Ridealgh, Mrs. M.
Taylor, R. J. (Morpeth)
Williams, W. T. (Hammersmith, S.)


Roberts, Emrys (Merioneth)
Taylor, Dr. S. (Barnet)
Williams, W. R. (Heston)


Roberts, Goronwy (Caernarvonshire)
Thomas, D. E. (Aberdare)
Willis, E.


Robertson, J. J. (Berwick)
Thomas, Ivor Owen (Wrekin)
Wills, Mrs. E. A.


Robinson, Kenneth (St. Pancras, N.)
Thorneycroft, Harry (Clayton)
Woods, G. S.


Ross, William (Kilmarnock)
Thurtle, Ernest
Wyatt, W.


Sargood, R.
Tiffany, S.
Yates, V. F.


Scollan, T.
Timmons, J.
Young, Sir R. (Newton)


Scott-Elliot, W.
Tolley, L.



Segal, Dr. S.
Usborne, Henry
TELLERS FOR THE AYES:


Shackleton, E. A. A.
Vernon, Maj. W. F.
Mr. Hannan and Mr. Bowdon.


Sharp, Granville
Viant, S. P.





NOES


Assheton, Rt. Hon. R.
Gridley, Sir A.
Peto, Brig. C. H. M.


Astor, Hon. M.
Grimston, R. V.
Pickthorn, K.


Baldwin, A. E.
Hare, Hon. J. H. (Woodbridge)
Ponsonby, Col. C. E.


Barlow, Sir J.
Harvey, Air-Comdre. A. V.
Prescott, Stanley


Bennett, Sir P.
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Prior-Palmer, Brig. O.


Birch, Nigel
Hinchingbrooke, Viscount
Raikes, H. V.


Boles, Lt.-Col. D. C. (Wells)
Hogg, Hon. Q.
Reed, Sir S. (Aylesbury)


Boyd-Carpenter, J. A.
Holmes, Sir J. Stanley (Harwich)
Roberts, H. (Handsworth)


Braithwaite, Lt.-Cmdr. J. G.
Hulbert, Wing-Cdr. N. J.
Roberts, P. G. (Ecclesall)


Bromley-Davenport, Lt.-Col. W.
Hutchison, Col. J. R. (Glasgow, C.)
Robertson, Sir D. (Streatham)


Brown, W. J. (Rugby)
Jeffreys, General Sir G.
Robinson, Roland (Blackpool, S.)


Buchan-Hepburn, P. G. T.
Keeling, E. H.
Ross, Sir R. D. (Londonderry)


Butcher, H. W.
Kerr, Sir J. Graham
Savory, Prof. D. L.


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Lambert, Hon. G.
Scott, Lord W.


Carson, E.
Langford-Holt, J.
Shepherd, W. S. (Bucklow)


Channon, H.
Legge-Bourke, Maj. E. A. H.
Smithers, Sir W.


Clifton-Brown, Lt.-Col. G.
Lennox-Boyd, A. T.
Spearman, A. C. M.


Crookshank, Capt. Rt. Hon. H. F. C.
Lindsay, M. (Solihull)
Stanley, Rt. Hon. O.


Crosthwaite-Eyre, Col. O. E.
Lloyd, Selwyn (Wirral)
Stoddart-Scott, Col. M.


Crowder, Capt. John E.
MacAndrew, Col. Sir C.
Strauss, Henry (English Universities)


Cuthbert, W. N.
McFarlane, C. S.
Stuart, Rt. Hon. J. (Moray)


Darling, Sir W. Y.
Mackeson, Brig. H. R.
Studholme, H. G.


Digby, S. Wingfield
Maclay, Hon. J. S.
Thomas, Ivor (Keighley)


Dodds-Parker, A. D.
MacLeod, J.
Thorneycroft, G. E. P. (Monmouth)


Donner, P. W.
MacPherson, N. (Dumfries)
Thorp, Brigadier R. A. F.


Dower, Col. A. V. G. (Penrith)
Maitland, Comdr. J. W.
Touche, G. C.


Drayson, G. B.
Manningham-Buller, R. E.
Turton, R. H.


Drewe, C.
Marlowe, A. A. H.
Tweedsmuir, Lady


Duthie, W. S.
Marples, A. E.
Vane, W. M. F.


Eccles, D. M.
Mellor, Sir J.
Wakefield, Sir W. W.


Elliot, Lieut.-Col. Rt. Hon. Walter
Moore, Lt.-Col. Sir T.
Ward, Hon. G. R.


Erroll, F. J.
Morrison, Maj. J. G. (Salisbury)
Webbe, Sir H. (Abbey)


Fleming, Sqn.-Ldr. E. L.
Morrison, Rt. Hon. W. S. (Cirencester)
Williams, C. (Torquay)


Fletcher, W. (Bury)
Mott-Radclyffe, C. E.
Willoughby de Eresby, Lord


Fox, Sir G.
Neven-Spence, Sir B.
Young, Sir A. S. L. (Partick)


Fraser, Sir I. (Lonsdale)
Nicholson, G.



Galbraith, Cmdr. T. D. (Pollok)
Nield, B. (Chester)
TELLERS FOR THE NOES:


Gates, Maj. E. E.
Noble, Comdr. A. H. P.
Major Conant and


Glyn, Sir R.
Odey, G. W.
Colonel Wheatley.


Gomme-Duncan, Col. A.
Peake, Rt. Hon. O.

Orders of the Day — PROFITS TAX BILL

Considered in Committee.

[Major MILNER in the Chair]

Clause 1.—(RATES OF TAX, ETC.)

The Chairman: Mr. Butler.

3.41 p.m.

Mr. Godfrey Nicholson: On a point of Order. Would it not be for the convenience of the Committee, Major Milner, if you were to indicate which Amendments you are going to call?

The Chairman: I think I can say, in regard to Clause 1, that the first Amendment to come before the Committee, that in the name of the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) in page 1, line 17, will also cover the succeeding five Amendments. I hope the hon. Gentleman will therefore address his remarks, if he succeeds in catching my eye, to any point which he wishes to make on the Amendment in his name.

Mr. Nicholson: Thank you very much, Major Milner. I wondered if you would allow Amendments to the long or short Title.

The Chairman: I can say right away that I do not propose to select those Amendments, unless any Amendment to the Bill makes a change necessary.

Mr. Nicholson: May I recall to your memory, Major Milner, the fact that during this Parliament, on no fewer than four occasions, alterations have been allowed in the Title without any alterations, or at least material alterations, to the actual terms of the Bill, but because it was generally felt that the Title was misleading. For instance, the Investment (Control and Guarantees) Bill was changed to the Borrowing (Control and Guarantees) Bill, which was thought by some to be more accurately descriptive of the nature of the Bill.

The Chairman: If the hon. Gentleman will forgive my saying so, I think he is quite mistaken. The circumstances are not the same.

Mr. R. A. Butler: I beg to move, in page 1, line 17, to leave out "twenty," and insert "twenty-two."
The object of this Amendment is to reduce the tax on undistributed profits, and we thought that it would be convenient, during the Committee stage of this Bill, which is not in itself very easy to amend, noxious though its contents may be, if we were to use this opportunity to discuss the question of undistributed profits and the reserves of companies—a matter of first-class importance to the national economy as a whole. Therefore this Amendment has been put on the Order Paper, and I think it will give us a chance of raising the important subjects which we considered on Second Reading and which will be considered again today as the main subject of the attack on this Bill.
Company reserves are a form of savings, and it is vital to our economy and the re-equipment of industry that the utmost care should be taken of industrial reserves, kept as they are for the purpose of re-equipment. I do not propose to import into this discussion any considerations, political or otherwise, other than this question of the importance of company reserves to our economy, and I think that perhaps the Financial Secretary and the Economic Secretary to the Treasury may be able to give us useful information as to their opinion on the value of these reserves to our economy, and also on the figures which I propose to quote to them.
3.45 p.m.
The result of this Amendment, if it were carried, would be to reduce from 10 to 8 per cent. the tax on undistributed profits, and we have calculated on the best information at our disposal—and we have taken the trouble to try to obtain it from all quarters—that this would result in a loss to the Exchequer of some £11.5 million, therefore leaving a balance under the Bill of £1.5 million. I mention that because those are the best figures we have available and the object of our moving the 2 per cent. reduction in the Profits Tax was not, therefore, to cause a loss to the Exchequer by the passage of this Bill, because if the Amendment were accepted, there would be a small gain. If the hon. Gentleman who will reply can tell me that these figures are not correct, I shall be obliged if he will inform me what he counts the exact computation of the reduction of 2 per cent. to be.
The position therefore is that we are not moving any Amendment today with


the purpose of taking money away. We are leaving this Bill as a Bill which provides a modest increase to the Exchequer, but I would remind hon. Gentlemen opposite of what I said on Second Reading—that, in our view, this Profits Tax is uneconomic. I said then, and my opinion is even stronger now in view of the representations I have received since then, that this Bill will probably not result in a lowering of dividends or in a mulcting of profit-makers. I do not believe it will have that result. I believe, and I have been confirmed in that opinion as a result of inquiries made from industrial and other circles, that it will result in eating into the reserves of companies.
I would repeat what I said on that occasion—that we would agree with any Measure which resulted in all sections of the population sharing, but that we do not believe that this Profits Tax will have that result. Therefore, we take the view that this is not an effective or valuable means of taxation, and that if the Government want to take from the profit-earners an equal sum to compensate for what they are taking from organised labour, this tax will not have that effect.
On Second Reading I tried to explain that directors of companies regarded it as a moral obligation to maintain their dividends when earnings justify this policy. I used arguments to show that there has been an all-round observance of the injunction of the Chancellor of the Exchequer that dividends were not to be raised, and I said that people in industry have played the game in that direction. I also quoted the fact that over 8 per cent. had reduced their dividends. We believe, however, in view of the perfectly moral position which directors of companies consider they should take up towards equity shareholders—on which they have as strong a moral feeling as hon. Gentlemen opposite have on other matters—that the result of the Bill will be that the whole incidence of the Profits Tax on undistributed profits, the Profits Tax on distributed profits and Income Tax at 9s. in the £ will fall upon that section of profits which are normally placed to reserve. What, in fact, will happen will be that the amount distributed in dividends will have to be paid as dividends and the whole burden of taxation will fall on the remainder, leaving a very small portion to be put to reserve.
The position about reserves is even more serious than this. The costs of replacement of capital assets in industry has increased between 200 and 300 per cent. since 1938. The general figure I am given by people who conduct our industry is that it is nearer 300 per cent. than 200 per cent. That, I think, can be supported by anybody who takes an interest in industry at the present time. If we have to replace a machine today, and the incidence of the cost has been particularly heavy since 1945, through no fault of anybody in particular but owing to the rise in the costs, the increase is now some 300 per cent. over 1938. Further, there is no doubt that costs have been increased by devaluation and the recent decisions. The fact is that this question of the reserves of industry is of even more burning importance than it was when we discussed it in our Budget Debates. Devaluation, due to the increased sterling cost of many essential stock materials of dollar origin, and, indeed, of sterling origin, and the consequent rise in the value of work in progress, book debts, etc., has further eaten into the available capital in industry which otherwise would be put to reserve for re-equipment.
We are, therefore, facing what anybody at present engaged in private industry regards as one of their most anxious problems—and that is, the availability of finance for re-equipment. I hope hon. Members opposite will take this argument in the same sense of gravity as that with which I am attempting to put it forward. I feel convinced that they will not be able to deny the fact that the person who profits most from re-equipment is the worker in the industry itself. The improvement of machinery relieves toil, makes work more pleasant and makes productivity easier, and it is in the interests not only of the capitalists in charge of industry or the entrepreneur, but it is particularly in the interests of our skilled work people that machinery of the most up-to-date character should be introduced into industry and that machinery should be replaced in industry.
The Chancellor himself realised that this was a burning problem, as is shown by the fact that he introduced into the Budget a deliberate provision permitting an increase in the initial depreciation allowances. When we discussed this in


the Budget Debates we pointed out that this was not a gift to industry but an advance, and an advance of which only firms having the capital available would really be able to take advantage. It was a scheme, therefore, which tended to help the big firms rather than the small firms. Our efforts at that time to improve this concession and to make the Chancellor realise that this was a burning problem were unavailing. We are, therefore, trying again in the Committee stage of this Bill to bring this question of the reserves of industry once more before the Committee. In fact, we are having another try.
The hon. Gentleman who is to reply cannot say that the Government do not themselves realise the gravity of this problem. The Chancellor must realise it, and I believe he realises the inadequacy of his own proposal for stepping up the initial depreciation allowance, because he appointed a committee to investigate this whole question and, as I understand it, this committee is now taking evidence from industry. The Chancellor has therefore conceded the point that the existing allowances for wear and tear in industry are inadequate. But the right hon. and learned Gentleman is not content to await the report of his own committee. He has to introduce a further fiscal deterrent by the imposition of this extra Profits Tax which, as I have shown earlier, will fall almost entirely upon the reserves of industry.
My case is made even stronger by an admission of the Chancellor himself, made at Workington on 9th January, 1949. In answer to statements which were floating about at that time that profits of industry were exceptionally large, the Chancellor felt bound to make this observation:
A large part of the so-called profits is not a pure surplus but must be put to reserve to pay for replacements and repair of plant and machinery and for industrial expansion to meet our new production needs.
That is just our case. Unless there is available a sufficient sum to meet precisely what the Chancellor was describing—the repair of plant and machinery and industrial expansion—we cannot hope to achieve the productivity level we need or to restore our economy in the way we would desire. Some hon. Members opposite, in the debates which I have attended

in the past, have raised the question, how far should industry be permitted to re-equip itself out of reserves created through extra profits? All I can say about it is that this practice has certainly been sanctified by very long usage in the development and expansion of British industry.

Mr. Sydney Silverman: On a point of Order. To guide those of us who want to take part in the subsequent discussion, may I ask, Major Milner, how far it is in Order on this Amendment to go into all the matters which the right hon. Gentleman is discussing?

The Chairman: I certainly think that the right hon. Gentleman has gone rather wide. The real discussion is as to the rate of 20 and 22 per cent. or the other figures mentioned in the Amendments, but I was hoping that perhaps if I permitted him a little latitude it might avoid any debate on the more general Question that the Clause stand part.

Mr. Butler: With all respect, Major Milner, I find it very difficult to accept your observations because this is an Amendment which we placed on the Order Paper to deal exclusively with undistributed profits. The fact that it was accepted by the Chair and that almost every other Amendment on the Order Paper has been ruled out of Order means that this is practically the only opportunity for debating this Bill. We specifically put the point down to test whether a debate on undistributed profits would be in Order and every one of the remarks I have made has been on the question of undistributed profits.

The Chairman: It is not correct to say that almost all the other Amendments have either not been selected or have been ruled out of Order. In fact, the great majority have been selected. In any event, the real question before the Committee, surely, is the rate of tax, and it does not give scope for the discussion of the whole subject matter of undistributed or distributed profits. Perhaps the right hon. Gentleman will continue.

Sir Richard Acland: If the right hon. Gentleman is allowed to develop the argument on which he has started, that the financing of business expansion out of profits is sanctified by


long tradition, surely it will be in Order for someone on this side of the House to develop the argument that this long tradition ought now to be brought to an end?

The Chairman: Having said what I have said, I hope the right hon. Gentleman will confine himself to the questions raised in the Amendment.

Mr. Butler: No doubt you will forgive my desire to doubt any observations you make, Major Milner, and I will endeavour to conform to your Ruling, but as this is a matter of undistributed profits, and as not a single word I have uttered has been anything to do with any subject except that of undistributed profits, I thought I had been arguing on a very small and narrow issue with rather more attention than usual. I am sorry that I should have offended the Chair on this occasion. I find it somewhat difficult to continue my observations if I am not allowed to talk about undistributed profits. I was in the middle of an argument and I feel rather at a loss now as to where I can continue. I do not now see any real value in the Committee stage of this Bill.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): It is true, as I think you have pointed out, Major Milner, and as my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) pointed out, that this Bill does not deal with undistributed profits. It deals exclusively and entirely with the increase in the tax on profits which are distributed. The rest of the Clause is pure machinery, and I admire the ingenuity of the right hon. Member for Saffron Walden (Mr. R. A. Butler) who has taken the machinery part of the Clause in order to make such a speech as he has made. It is not for me to say whether or not it is in Order, but I would point out that we are dealing not with undistributed profits but with distributed profits.

4.0 p.m.

Mr. Butler: I cannot for a moment accept the argument of the Financial Secretary, considering that the whole case of the Opposition in tackling this Bill has been that the effect is going to be that this increase of 5 per cent. on distributed profits will fall, in almost every case, upon reserves, which means upon undis-

tributed profits. I explained at great length in my Second Reading speech—and I am prepared to continue at great length this afternoon if necessary—that this tax will not result in a reduction of dividends, but will result—

The Chairman: I am sorry, but the right hon. Gentleman is now talking about the tax as a whole. That may or may not be a proper question to raise on the Motion, "That the Clause stand part of the Bill," but here we have a much more limited question before us, and I must ask the right hon. Gentleman to confine his remarks to the Amendment.

Mr. Butler: I am really in some difficulty if I am to accept your Ruling, Major Milner, that I cannot touch upon that point. It means that I am unable to deal with the tax on distributed or undistributed profits. My last remarks related to distributed profits, and, therefore, I must ask you whether any further remarks on this subject are in Order.

The Chairman: Is the right hon. Gentleman moving his Amendment?

Mr. Butler: I should like to be allowed to develop the argument.

The Chairman: I know that the right hon. Gentleman would wish to keep strictly within the rules of Order, but, quite clearly, the only subject of discussion is the question of the increase in the relief from 20 to 22 per cent. Surely, that is the question before the Committee.

The Economic Secretary to the Treasury (Mr. Jay): On a point of Order. On the strict question of what is in Order on this Amendment, Major Milner, surely the right hon. Gentleman is right in saying that we are here discussing whether the rate of tax on undistributed profits should be 10 per cent. or 8 per cent., and, therefore, arguments addressed strictly to that on this Amendment must surely be in Order?

The Chairman: Certainly, so far as the arguments are addressed to the rate, I agree, because that is the subject matter of the Amendment.

Mr. Butler: I am greatly obliged to you, Major Milner, and to the Economic Secretary for creating this happy atmosphere in the Committee. I can see that the hon. Gentleman has taken to


heart the admonitions I have had to administer to him in the past, and I congratulate him on coming over into Macedonia.
I was about to develop my argument relating to the question of undistributed profits by saying that that question has become even more important now that the National Savings Scheme itself was running last year at a debit, and, as far as we can see—when this year's figures come out—the savings scheme as a whole is running at a debit in this financial year. If that be the fact, and in view of the collapse of Government credit and the inability of this country to rely upon the savings scheme, it is essential, in our view, that we should not prejudice one further great source of savings other than the insurance savings—the savings of industry. In fact, these reserves of industry are in themselves savings which are put aside by industry for re-equipment.
I have tried to calculate the position in regard to undistributed profits, and as far as I can obtain the advice of Mr. Chambers, he has calculated that between what depreciation allowances granted for tax purposes would cover and the needs of replacement, there was a gap of some £400 million in 1947. That is a very big gap on a matter of vital importance to our economy. The President of the F.B.I. said that the gap between allowances and the needs of industry in this sector was no less than £300 million in 1948. The official figure for profits put to reserve in 1938 was £170 million. The equivalent figure for 1948 was £545 million. If we deduct the lesser amount—not the £400 million, but the £300 million—which the President of the F.B.I. says is the gap between need and depreciation allowances, we come to a figure of £250 million. I have further consulted the "Bulletin" of the London and Cambridge Economic Service which calculated that the amount—

Mr. S. Silverman: On a point of Order. I am sorry to be persistent about this, especially in view of the fact that the right hon. Gentleman has clearly prepared a very careful argument, but it seems to me that we are now getting into the realms of an absolutely general and unrestricted Debate about undistributed profits and reserves. If that is in

Order, nobody will mind, but one would have thought it was a little doubtful.

The Chairman: I cannot agree with the hon. Gentleman. As I understand it, the right hon. Gentleman is arguing that the undistributed profits—the reserves—are too small, and that, therefore, it is proper to admit a greater relief than 20 per cent., namely, 22 per cent. If that is the case, it seems to me that the right hon. Gentleman's argument is in Order. Whether it is justified on its merits is, of course, another matter.

Mr. Butler: I see that the area of agreement, not only with my approach but with my remarks, is widening, and I hope that shortly it will embrace the whole Committee, not only in the scope of my arguments, but also in their tenor and context, and that the hon. Member for Nelson and Colne (Mr. S. Silverman) will be included.
I had got to the peculiarly complicated stage in my argument in which I was saying that the "Bulletin" of the London and Cambridge Economic Service—which is the only economic source from which I can obtain figures of this sort—calculated that the amount of working capital needed to maintain the volume of stocks at prices current in 1948 is some £150 million. If that is deducted from the figure of £250 million, it leaves only £100 million available in the reserves of industry, compared with £170 million in 1938. This figure, I maintain, is sufficient to do no more than maintain productive capacity, without taking into account the need for the expansion of industry or the replacement of plant.
I maintain that these arguments have shown that the position of the reserves of industry is an extremely serious one in this country at the present time. Upon that question of reserves a great deal of our future expansion depends. Therefore, I trust that the Government will pay close attention to the remarks I have made, and will realise that in putting forward this Amendment to reduce the tax by only 2 per cent.—which is a measure far more modest than many of my hon. Friends on this side would themselves like to espouse—we are trying to put forward an argument deliberately calculated, not to raise the cost to the Exchequer on this Bill, but to come within the purview of this Bill itself. I


agree that if this Amendment were carried it would very largely negative the purposes of the Bill, but that is, of course, the object of moving it, because we do not like the Bill and should like to see its purpose countered and destroyed altogether. We thought that perhaps the most interesting way of using part of the time on the Committee stage was to draw attention to this very important question of reserves of industry, and I have therefore used the arguments which I have just put to the Committee.

Mr. Collins: My intervention in this discussion is due to the extraordinary reference made by the hon. Member for Saffron Walden (Mr. R. A. Butler) to the fact that National Savings are a debit balance and to his drawing of a comparison between National Savings and savings which he hopes that industry will make if this Amendment is accepted. There seems to me to be a very wide distinction between National Savings, which can only be contributed by the public from income on which tax has already been paid, and this form of savings which will be made by industry and on which tax will not have been paid at all—at least not to the extent of the 2 per cent. which it is hoped to save if this Amendment is accepted. That is the very purpose of the Amendment, apart from the basic purpose which the right hon. Gentleman has stated of trying entirely to wreck the Bill.
It seems to me extraordinary that the whole of the case for this Amendment as put forward by the right hon. Gentleman rests on the assumption, which he says is backed up by all the research and inquiry which he has been able to make, that in no circumstances will the directors who are responsible for fixing the level of distributed dividends and profits be prepared—or the profit takers either—in the present state of the country to take any less in dividends. That seems to me to be an anti-social statement, and its implications as to the concern of the shareholders and profit takers for the present situation of the country seems to be utterly alarming. It presupposes an attitude which, if the statement be true, throws a baleful light on profit takers. In my view, it is a very unfair light indeed.
Recently we have been discussing the effects of devaluation on the standard of

living. Undoubtedly everybody in this country, out of his taxed income, will have to make a sacrifice—even the old age pensioners. Here we have the profit takers, not all of whom are wealthy people, of course, and it is suggested—

Mr. Nicholson: On a point of Order. Surely this very wide argument would be more appropriate on the Question "That the Clause stand part of the Bill."

The Chairman: I am listening very carefully. I should be obliged if the hon. Gentleman would leave the matter to me.

Mr. Collins: Arising out of that, I have so far dealt entirely with notes which I took of remarks made by the right hon. Gentleman who moved the Amendment. I hope I shall not go beyond what is in Order.

Mr. Nicholson: I hope the hon. Gentleman will not think me discourteous, for I did not intend to be. It seemed to me that if we could have a very wide Debate, it would be simpler to have it on the Question that the Clause stand part.

The Chairman: That was what I indicated to the right hon. Member for Saffron Walden (Mr. R. A. Butler).

Mr. Nicholson: I apologise. I did not mean to be discourteous.

Mr. Collins: I was pursuing what to me seemed the extraordinary difference between the attitude disclosed by the Opposition now to the proposal that tax on distributed profits should be increased, and the very quiescent attitude which they displayed when proportionately far greater sacrifices had unfortunately to be demanded from people many of whom will be very much poorer.
The other point which struck me with considerable force was that, according to the right hon. Gentleman, savings in industry by means of re-investment, which would be facilitated by this Amendment if it were accepted, must, and can only be, in his submission on behalf of shareholders and profit takers, at the expense of the Exchequer and at the expense of the consumers, who will have paid already for the products of the various firms and thereby provided the profits. That seems to me to be a very inflationary suggestion. Why should it always be the consumers who will have to pay for


the expansion and re-equipment of industry merely by reason of the fact that they have paid a larger price for the products than they would have needed to pay if lower, and indeed fairer, prices had been demanded?
4.15 p.m.
A price for a product which is higher than strict efficiency and a fair return demand must be an agent in the creation of unemployment. It must be in the long run a menace to the continued prosperity of this country. Therefore, if the Government were to accept the responsibility for financing new expansion by forgoing what at the present time is regarded as a proper level of taxation, having regard to the needs of the country, they would indeed be acquiescing in adding to our difficulties and contributing to the ruin of the country.
Another point is that even if, as is true, the major part of industry is prepared to adopt the Chancellor's request that dividends should not be increased, and if as is also true the undistributed part of the profits made is ploughed back and remains in industry, but that eventually a large proportion is distributed in one form or another, either by means of increased dividends or, as is more usual, by means of bonus shares. I know all about the argument that it makes no difference, that if a share is £1, and out of accumulated profits or balances a bonus share of another £1 is issued, the Stock Exchange price of the share is thereby halved, and it makes no difference. I have heard that. But it is not true. It does not happen. It does not work out that way.
This money which is left in the business, and which, in accordance with the terms of this Amendment, would thereby be increased, eventually goes out to the shareholders in one form or another. If that were not so, it would be bad business indeed on the part of the people running the undertaking, because there would be no real object from their point of view; and, having in mind the principles which the right hon. Gentleman adumbrated as the moral feeling which directors have of the need never to declare a lower dividend, there would be no object in this Amendment. If that principle is denied, and if hon. Members

on the other side of the Committee do deny it, then they are making complete and utter nonsense of the right hon. Gentleman's case.
Therefore, I hope that when my hon. Friend replies to the case that has been put forward and to the Debate, he will make it clear that we on this side of the Committee repudiate utterly the case that in no instance will directors or shareholders or profit takers agree to some sacrifice on their part on behalf of the country; that in no case do we accept the contention that it is the obligation and duty of the Government or of the consumers to provide industry with the wherewithal for expansion, as distinct entirely from renewal of plant which is worn out; and that in no case are we prepared to accept the contention that while people with very limited incomes are, out of their taxed incomes, called upon to make what are to them very considerable sacrifices, we should not at the same time demand from the profit takers a fair share of the sacrifice which now has to be made.

Mr. Erroll: It would be impossible for me to reply to all the tendentious remarks made by the hon. Member for Taunton (Mr. Collins), but I should like to point out to him that this is a Bill not to reduce distributed profits but merely to tax them, and that therefore there is no reason why directors of companies should not make such distribution as is proper, bearing in mind the profitability of the company concerned, because in all cases there is a dividend limitation which prevents them from distributing above the ceiling agreed upon with the Chancellor of the Exchequer.

Mr. Collins: Is not that what I was saying? Is not the point this: Because of this extra 5 per cent. tax on distributed profits and the moral obligation on directors not to distribute less, they are going to increase the dividend by the amount of the tax?

Mr. Erroll: No, and for a very good reason. The tax does not fall upon the dividend at all. The tax is paid out of money not distributed as dividend by the very nature of the Bill. There is no moral obligation on directors to distribute profits when profits are non-existent. Hon. Members opposite are in grave error in


thinking that profits accrue automatically instead of through the efficiency of the firms who produce them. Many firms today are not producing the profits which would enable the directors to distribute up to the limit they are authorised to do. When it comes to sacrifices, the dividend limitation came into effect some time ago and has been loyally adhered to, whereas the workpeople who are now being called upon to bear sacrifices of £8 million have had a rise in wages.

Mr. Ronald Chamberlain: That dividend limitation was specifically withdrawn by the Federation of British Industries earlier this year. [HON. MEMBERS: "No."] Oh, yes. In a communication to the Chancellor of the Exchequer they said that they could no longer retain this ceiling of dividends, but they would substitute for it a policy of restraint and moderation, whatever that meant.

Mr. Erroll: I am also aware of the facts, which are that almost all companies have undertaken to limit their dividends to those which they previously distributed.
To turn to my main point, I would ask the Economic Secretary: What is the purpose of this tax? Is its purpose to raise another £13 million for the Inland Revenue or merely, as has been stated—

The Chairman (Major Milner): The hon. Gentleman's remarks should be addressed in that context to the Clause. He is now dealing with the question of the tax as a whole. That is a different matter from the Amendment which deals with relief.

Mr. Erroll: I am sorry if I should have appeared to stray outside the terms of the Amendment, but I was anxious to show that the yield from the tax may very properly be returned to industry by means of the Amendment which we have proposed. If the Amendment is accepted, the yield from the tax would in fact be returned to industry for the replenishment of its capital resources. I hope, therefore, that I may continue on those lines.
We have been suffering a good deal in the last six or nine months from lecturettes to industry given by the Front Bench opposite, and the Economic Secretary to the Treasury has not failed to add his quota. One of his brighter remarks

has been that the taxation of profits does not enter into industrial costs. No greater piece of nonsense has yet emerged from his mouth. The plain fact is—

The Chairman: That again is a matter which, if it is to be raised at all, should be raised on the Clause. That may or may not be an objection to the tax as a whole, but it does not seem to be an argument which can be applied to the present Amendment.

Mr. Erroll: The taxation of undistributed profits, which this Amendment is designed to alleviate, has in fact a considerable inflationary effect. When undistributed profits are taxed it then becomes necessary to increase the price charged to the consumer in order to yield an undistributed sum which when taxed is sufficient to replace the goods sold and to replace machinery and plant which is wearing out.

Mr. Collins: Is the hon. Gentleman not now mixing up the need to maintain the rate of profit with the need to maintain sufficient income for replacements? This is concerned with profits and not replacements.

Mr. Erroll: A great deal of difficulty arises from the confusion in the minds of hon. Gentlemen opposite between the words "profit" and "income," because what they describe as profit is in fact undistributed income required for the maintenance and development of the business. It is this undistributed income, or unspent earnings, which is in fact being taxed by this Bill, and our Amendment seeks to reduce the amount of tax on the undistributed earnings which are vitally required for the maintenance of the business.
Hon. Gentlemen opposite have asked: How is business to be financed? How is it to be financed, indeed, if the only means open to a business to finance itself are taken away from it? When a firm wishes to embark upon capital expenditure at the present time it cannot go to the capital issues market and get money from the public with prices falling as they are at present. The only way development can be financed is by means of using the unspent earnings which are at present being subjected to a severe rate of taxation. The only way one can overcome that loss is by so raising prices


as to bring in a sum which when taxed will yield the amount required.
The taxation of the undistributed profits, earnings or income, whatever we like to call them, is in fact an inflationary factor in our economy. There is no escaping that fact. The reason we seek to reduce the tax on undistributed profits is to enable industry to re-equip itself at the present time and to carry out those very precepts with which hon. Gentlemen opposite are so very fond of lecturing industry.

Mr. S. Silverman: I am afraid that I am not qualified to follow the speech of the hon. Member for Altrincham and Sale (Mr. Erroll) in all its intricacy and ingenuity. I prefer for three or four minutes to deal with the much simpler and readily understandable argument which the right hon. Gentleman employed in moving his Amendment. He was perfectly frank and candid with the House about the effect of the Amendment. He said quite plainly, and in simple and direct words such as he normally employs in addressing the House, that the effect of his Amendment would be to wreck the Government's proposals. He told us that he was not in the least alarmed at the thought of that result. If that was not the sole purpose of the Amendment, he was quite glad that that would be the result of it. He told us why. He described the Government's proposal as a vindictive proposal.
I can quite understand that if the right hon. Gentleman sincerely believes that the purpose which the Government had in view in seeking to have the Clause enacted as they want it, instead of having it enacted as the right hon. Gentleman would prefer, was vindictive, he is entitled to put down an Amendment which would have the effect of wrecking the proposal and so make impossible the carrying out of a vindictive purpose. Of course, if one does not think that the Government's purpose was vindictive, the argument will not sound so attractive.
4.30 p.m.
After all, what was that purpose? The purpose was still further to discourage the distribution of dividends. The hon. Member for Altrincham and Sale said that the purpose was not to reduce dividends. There may be some technical sense in

which he can make good that argument, but I am not sufficiently technically-minded to follow it. It is quite clear—I do not think anybody denies or doubts it; I am sure the hon. Gentleman does not deny it—that the Government's purpose was to re-deploy the machinery of this tax in order to make sure that distributed profits bear an additional tax. That is what the right hon. Gentleman thought was a vindictive purpose. Why should it be a vindictive purpose? What is vindictive about it?—unless hon. Gentlemen opposite intend to say to the country that it is vindictive to attempt to reduce the spendable earnings of dividend earners at the same time as an appeal is being made to everybody else in the country to restrict their own spending.

Mr. Assheton: My right hon. Friend said "reduce," not "restrict."

Mr. Silverman: I do not quite follow that. I should have thought that "reduce" and "restrict" meant the same thing, unless the right hon. Gentleman intends "restrict" to mean that there must be no increase. It must not be forgotten that one effect of devaluation is to provide an uncovenanted and unearned profit to a great many industries. [HON. MEMBERS: "No."] Certainly it does.

The Chairman: The hon. Gentleman is now arguing upon the matter generally, which may be a matter for discussion when we come to Debate the Question "That the Clause stand part of the Bill." I am not quite sure at the moment about that; but certainly this is not the appropriate time to discuss it.

Mr. Silverman: I am doing my best to keep within the various rulings which you have been good enough to give from time to time since this discussion started. I thought the right hon. Gentleman's argument was ultimately held to be relevant to the Amendment because it dealt with the effect of the Government's proposal, even though only in a machinery way, in its effect on undistributed profits. I am merely endeavouring to deal with the argument as the right hon. Gentleman put it forward. I certainly do not want to go beyond that. I quite agree that there are other opportunities of dealing with the general merits of the policy when we discuss the Clause as a whole, and that it would not be strictly relevant at this stage.
I am endeavouring to deal with the right hon. Gentleman's argument that he was justified in recommending to the Committee an Amendment which he frankly conceded would have the effect of wrecking the whole Clause, on the ground that the purpose of the Clause was a vindictive purpose which ought not to be allowed to prevail. At the same time, he said that the Bill would not have the intended effect, but I do not want to deal with that because I think it is more appropriate to the Clause as a whole. If it be true that the Amendment would have the effect of wrecking the Government's proposal, and that that is one of its advantages, then I am entitled to say that we on this side of the Committee and our supporters in the country will not regard this purpose as being vindictive. On the contrary, it seems to us to be mere common equity. I will now leave the point. I have met the argument in as detailed a form as is appropriate at this stage.
I do not know whether or not it has occurred to the right hon. Gentleman, but if the argument with which he recommended this Amendment is sound, it is nothing more than a declaration of sabotage on the part of a whole section of taxpayers. I am not for one moment suggesting that the right hon. Gentleman would be in favour of any such thing, but I am saying that such is the effect of these facts, if indeed they are facts. What he was saying was: "Do not think for one single moment that this proposal will really result in dividend drawers spending less dividends. Do not think that will happen, because those who run these matters, out of a high sense of moral obligation to their shareholders, will see that their shareholders get just as much as they got before. They will escape making any sacrifice or any contribution of any kind. We, rather than allow them to make any general contribution to the national sacrifice, would run down our reserves, with all the effect that may have on the development of our industry."
That was the right hon. Gentleman's argument, and if that argument is sound, I say that it is a declaration by the right hon. Gentleman of an intention on the part of all these people to evade their obligations under the Bill, not to make their contribution, not to limit their own spending power, and not to come into the

general national body of effort to minimise inflationary pressure; but, on the contrary, to maintain it to the full, and to see that any extra money they have to pay is at the expense of capital reserves and the development of the industrial capacity of this country.

Mr. R. A. Butler: The hon. Gentleman has been making some very serious charges. I do not know whether he attended the whole Second Reading Debate; I did not see him here; but on that occasion I developed to a greater length my belief that in some cases dividend reductions would result, and I quoted the figure of 8 per cent. so far. Only today I have read that a large firm has announced that it proposes to reduce its dividend. I am very glad to note such cases; but I am not recommending any policy to industry, nor am I advocating such a policy. We must leave it to industrial leaders. I am saying that in a large number of cases a certain moral obligation exists to equity shareholders, and that that will be observed. I am only stating facts, not advocating a policy.

Mr. Silverman: The right hon. Gentleman must not attempt to have it both ways. I concede at once that he would not advocate or recommend any such thing. Of course, he would not. What I am pointing out is that, if his argument is sound, that nevertheless would result. That is what would in fact be happening. If the right hon. Gentleman says, "Oh, no, it does not happen at all," or that it only happens to a small percentage, then to that extent he is withdrawing the argument he advanced today when proposing this Amendment. Either this will be paid at the expense of reserves or it will not. If it is not to be paid at the expense of reserves, there is nothing in his argument, and he ought to withdraw the Amendment. If it is to be paid at the expense of reserves, then I say again that it is nothing more than a declaration of sabotage and evasion in advance of the passage of this Bill.

Mr. Nicholson: I wish to meet the argument of the hon. Member for Nelson and Colne (Mr. S. Silverman) fairly and squarely, and to give him a few figures, but first I revert for a moment to the valuable speech of the hon. Member for Taunton (Mr. Collins), who succeeded in saying a good deal in a short time. We


are all in agreement that sacrifices should be shared fairly and equally. Our quarrel with this proposal is that it does not do that, or that if it does it in any way at all, it does so by doing the gravest possible harm to the reserves of industry, on which the whole country depends. That is our argument put fairly and squarely.
We are not anxious that any class or section of the community should avoid necessary sacrifices. Our contention is that this proposal does infinite harm to the economy of the country, and that we cannot afford it.

Mr. Collins: The hon. Gentleman makes that assertion. Would he say why?

Mr. Nicholson: If I may finish my speech I shall try to say why.
The hon. Member for Nelson and Colne says, in common with most hon. Gentlemen opposite, that the need is to reduce dividends and that the real purpose of this Bill is to bring about a reduction in dividends. Has the hon. Member paused to consider what reductions in dividends are necessary to do this? Has he paused to consider the effect of this additional burden, added to the existing burden on industry? I will give him three examples. Let us take the company which distributes three-quarters of its net profits in dividends. It cannot be considered by reference to the percentage of dividends because the total profits vary. If the company distributes three-quarters of its net profits it can place literally nothing to reserve.
Suppose that the company wanted to place something to reserve. Would the hon. Member consider it immoderate of that company if it decreased the amount of profits distributed to two-thirds? The hon. Member does not care to give an answer to my question. I tell him that it will add to the reserves of that company precisely 5½ per cent. of its net profits. Perhaps he may say that instead of distributing three-quarters of the net profits by way of dividends it should distribute only one-half. Has he any conception of the not addition that will mean to the reserves of the company? Has he, in fact, studied this question at all before airing his views in this Committee? It would mean 15 per cent. of the net profits of that company would go to reserve, and

no industry can continue, at a time of rising prices and inflation, by putting only 15 per cent. to reserve.
Perhaps the hon. Member would go further than that. He can hardly ask a company to do more than to forego any dividends at all. Has he any idea of the amount of net profits that would go to reserve in that case? Does he know anything at all about it? It would mean only 49½ per cent. of the profits would go to reserve. The reduction of dividends distributed from three-quarters of the net profits to one-half of the net profits will result in only 15 per cent. of the net profits going to reserve, and therefore I say that this is ruining industry.

4.45 p.m.

Mr. Henry Strauss: I wish to deal with one point only that has been made by two or three hon. Members opposite, the extraordinary suggestion that no contribution is being made by the recipient of a dividend if the amount of his dividend is not reduced. That is a fantastic suggestion. The hon. Member for Taunton (Mr. Collins) said that old age pensioners are going to be worse off as a result of devaluation, and he is quite right. But why are they going to be worse off? It is because, although what they get will be nominally the same, it will be worth less, and that is precisely the same position as that of the recipient of a dividend if his dividend remains the same. Recipients of dividends will suffer in the same way from devaluation as the old age pensioners to whom the hon. Member quite rightly drew attention. The fantastic absurdity of all this is—

The Chairman: I am sorry but hon. Members will persist in dealing with the tax generally. When the hon. Member for Farnham (Mr. Nicholson) concluded his remarks, it appeared that the whole of what he had said was out of Order. Had I known that that was to be the conclusion of his remarks, I should have called him to Order at the commencement of his speech.

Mr. Nicholson: I had no intention of going beyond the rules of Order, I was merely dealing with the argument of the hon. Member for Nelson and Colne (Mr. S. Silverman). I apologise if my remarks were out of Order.

The Chairman: Hon. Members will appreciate that it is extremely difficult on a somewhat complicated matter of this sort to know precisely how a Member is going to relate what he is saying to the Amendment before the Committee until he has proceeded some way. The hon. and learned Member for the Combined English Universities (Mr. H. Strauss) was speaking of recipients and of the tax as a whole, which are not the subject matter of this Amendment. The Amendment is much more limited in its scope.

Mr. Strauss: While I appreciate the difficulty of the Chair on an occasion of this sort, and always wish to bow to your Rulings, Major Milner, may I point out that, as the hon. Member for Taunton was allowed to proceed on precisely this point, I thought I should be justified in replying to his argument? However, I have only a few more remarks to make about it. I can quite understand the search for equality of sacrifice through Income Tax or Surtax, but the proposal we are here concerned with relates only to limited liability companies and has no regard to the wealth of the ultimate recipients. The hon. Member for Nelson and Colne and the hon. Member for Taunton were guilty of the mistake that there would only be a sacrifice on the part of recipients of dividends if dividends were reduced.

Mr. S. Silverman: I did not advance that argument. I dealt with the argument put forward in favour of this Amendment from the Opposition Front Bench. It was said that the tax would not be paid by the dividend holder but would come out of reserves. I do not know whether that is right or not, but, if it is right, the dividend holder will be making no contribution.

Mr. Collins: The people in the lower income groups will be making a vastly higher proportionate sacrifice.

Mr. Strauss: I have already pointed out that both hon. Members overlooked the fact that the recipients of dividends will suffer, just as the old age pensioners will suffer, if the amount they receive remains the same, because of the diminution in the value of money. It is perfectly true that in some cases the recipient may be a rich man.

The Chairman: May I point out that we are not dealing here with the

recipients of dividends or with incomes, but with corporate bodies, which is quite a different thing.

Mr. Strauss: It is precisely because we are not dealing with recipients that the argument I am endeavouring to controvert is so wholly wrong. If we were dealing with recipients there might be something to be said for the argument put forward, but we are dealing with reserves of joint stock companies which take no notice of the ultimate recipients of the dividends. There is, therefore, no justification for the argument that has been put forward from the other side. If I have said anything which is out of Order I apologise and will trespass no longer on the time of the Committee.

Mr. Molson: The hon. Member for Nelson and Colne (Mr. S. Silverman) has not on this occasion produced so logical an argument as those he sometimes produces when he comes to the assistance of the Treasury Bench. The argument from this side is that the effect of this increased tax upon distributed profits will be that the tax will be paid out of reserves. Either that argument is correct, or the tax will be paid out of distributed profits. If, as we on this side believe, it is being paid in the majority of cases out of undistributed profits, that will mean that the tax will bear upon the profits which, according to the proposals of the Government, they do not intend to reduce below what they are at present. If, on the other hand, the argument which has been advanced from the other side of the Committee is correct, and if this increased duty will be paid out of distributed profits, then no harm will be done but an unexpected benefit will accrue to industry from the reduction in the duty upon undistributed profits.
The argument put forward by the hon. Member for Nelson and Colne was that it is only that part of the profits which is distributed in dividends which he desires to to see reduced. He described as sabotage the suggestion that if directors had to pay out of the total volume of profits of the company, a higher Profits Tax assessed on the portion distributed in dividends, if they took that from undistributed profits, that would amount to sabotage and would be defeating the intention of the Government. That is a fair statement of the hon. Gentleman's argument.
Underlying his argument, and, I believe, the proposals of the Government, is the assumption that at present it is desirable that the largest possible proportion of the profits made by companies should be ploughed back into industry. That has been said quite openly. On the assumption that the Government's view is well-founded, why should they oppose a proposal to reduce the taxation on undistributed profits? They should desire to make certain that the larger amount of the profits made by industry were available for the renewal and extension of industry.

Mr. S. Silverman: I follow this part of the hon. Gentleman's argument quite well, but what I do not understand is how it assimilates itself to the suggestion made by his right hon. Friend who moved the Amendment, that the Government could not accept the Amendment without destroying the Bill.

Mr. Molson: I did not hear quite the whole of my right hon. Friend's speech. The hon. Gentleman has said that my right hon. Friend said the Amendment was intended to be a wrecking Amendment. I did not hear my right hon. Friend say that.

Mr. Assheton: Actually, he did.

Mr. Molson: The purpose of this Amendment—and I suppose that I can understand an Amendment to which I am speaking as well as anyone else—is that the total revenue received by the Government from Profits Tax should not, in our present difficult circumstances, be reduced. If the Amendment were accepted, we estimate that there would be an increase of £1½ million in receipts by the Exchequer from the Profits Tax. What we are concerned to do, since we failed to defeat the Bill on Second Reading, is to make it less harmful than it would be in its present form. We therefore propose that if the Government intend to increase the tax on those parts of profits which are distributed as dividends, there should be imposed a corresponding decrease in the taxation of those parts of profits which are not distributed, and which are ploughed back into industry. As our assumption is that in the majority of cases this increase in the Profits Tax will be paid out of undistri-

buted profits, and the assumption made on the other side of the Committee is that they ought to be paid out of undistributed profits, in both cases this is an entirely sound Amendment.
I want to reply, bluntly and definitely, to arguments which have been put forward from the Government benches, notably the other day by the hon. Member for Blackley (Mr. Diamond) and the hon. Member for Central Southwark (Mr. Jenkins), in what were, in other respects, closely reasoned and fair-minded speeches. Underlying the whole of their argument was the assumption that a reduction in dividends is something entirely different in kind from a reduction in wages.
Let us look at this matter from the point of view of the Chancellor. He has accepted a proposal which was originally put forward by my hon. Friend the Member for Edgbaston (Sir P. Bennett), that at this juncture industry should voluntarily agree to limit its dividends. The right hon. and learned Gentleman has frankly acknowledged that by and large, industry has stood by the undertaking which the F.B.I. gave on its behalf. It is quite impossible to say that the trade unions have accepted, in the same way, a corresponding request that there should be no demands for higher wages or reduced hours, except in so far as there would be an increase in production. At this time hon. Members opposite regard it as reasonable not merely to demand that there shall be no increase in dividends, but that a punitive tax of this kind shall be imposed on dividends with a view to their being reduced. As my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss) pointed out, in so far as devaluation results in a decrease in the purchasing power of the pound, exactly the same reduction is made in the value of dividends as in the value of wages.

The Chairman: The hon. Member's argument might be addressed to the Motion "That the Clause stand part of the Bill," but not to the Amendment. Having regard to the wide form which the Debate has taken, I hope we shall not have another Debate on that Motion when we come to it. I endeavoured to make that bargain with the right hon. Gentleman the Member for Saffron Walden (Mr. Butler).

Mr. W. J. Brown: In view of the difficulty of debating the merits of the Amendment without transgressing the ground which can be covered in the Debate on the Motion "That the Clause stand part of the Bill," might I suggest, Major Milner, that we vote on the Amendment and discuss its merits after we have disposed of it?

5.0 p.m.

Mr. Molson: I respectfully agree with what you have said, Major Milner, in criticism of the list of arguments that I advanced. I confess that they are perhaps a hangover from a previous Debate when I had not the good fortune to catch Mr. Speaker's eye. Therefore, while enjoying the latitude which has been given to me today, I was able to hang my arguments on some observations which had been made by an hon. Member opposite.
I really rose in order to deal with the particular point that the purpose of this Amendment is not wrecking, in my view. It is in order to increase the reserves available for re-instatement in industry by the same amount as the Profits Tax is increased by those profits which are distributed. I hope the Economic Secretary to the Treasury will at least disavow any sympathy with the argument of the hon. Member for Taunton (Mr. Collins), who apparently took the view that such profits should not be made by industry, put to reserves and ploughed back as would assist the development of the industry in which those profits have been made.

Mr. Douglas Houghton: We have heard what this Amendment is and what it would do. I am wondering whether we could clear our minds as to the nature of the Amendment and what its effect would be if it were passed. At the moment we have a Profits Tax which is strangely enough a tax on profits. I say "strangely enough" because Income Tax is not always a tax on income, and, in fact, nowhere in the Income Tax Acts is income defined. Here we have a Profits Tax which is a tax on profits, and that tax is 25 per cent. There is relief given of 15 per cent. on that portion of the profits not distributed. The effect of the Profits Tax at the present moment is to tax distributed profits at 25 per cent. and undistributed profits at 10 per cent.

Mr. Selwyn Lloyd: The hon. Gentleman says that this is a Profits Tax

upon profits. Does not that depend on how profits are defined, and has not the Chancellor himself already recognised the fact that the present definition of profits is wholly misleading?

Mr. Houghton: I am not going to be drawn into a discussion on the definition of profits. We know that the profits upon which the Profits Tax is charged are fully described in the Profits Tax Act, and they are adjusted profits. What I want to get at is the effect of the Amendment on the Profits Tax, and we now have it. I have said, I think with the agreement of the Committee, that the Profits Tax is 25 per cent. on distributed profits and 10 per cent on undistributed profits. The proposal in the Profits Tax Bill before us—

Lieut.-Commander Gurney Braithwaite: The hon. Member referred to the Profits Tax Act. I take it that what he has in mind is the Finance Act.

Mr. Houghton: I beg pardon; I meant the Finance Act. There is a proposal in the Bill to increase the Profits Tax from 25 per cent to 30 per cent., and it is proposed to increase the relief on undistributed profits from 15 to 20 per cent., so that the proposal under the Bill is that the tax on distributed profits will be increased from 25 per cent. to 30 per cent. and the tax on undistributed profits will remain the same as before, at 10 per cent.
The Amendment proposes to increase the relief on undistributed profits from 20 per cent., as it is in the Bill, to 22 per cent. That is a proposal to increase the relief on undistributed profits in order to ease the additional charge on distributed profits. When the right hon. Member for Saffron Walden (Mr. R. A. Butler) stated that the effect of the Amendment would be to wreck the Bill, he was perfectly right, because the effect of the Amendment is to reduce the increased charge on distributed profits. To that extent the Amendment defeats the purpose of the Bill. I hope we are now clear about what the Bill and the Amendment propose to do.
For a few moments I should like to deal with the question of where the Profits Tax comes from, because there seems to be a great deal of confusion and difference of opinion on the matter. It may come by reduced dividend, by way of contribution from reserve, or from


increased profits. Do not let us lose sight of the purpose for which the Chancellor first proposed the increase in the Profits Tax—to reduce the profits which inevitably some industries—and pretty large industries at that—would make out of the devaluation of the pound.
I concede at once that in some cases if the board of a company felt it right and necessary to maintain some dividend distribution although they had not got increased profits out of which to pay the increased tax on distributed profits, this additional tax might come out of their reserves but not the reserves necessary for the development of business enterprises or which were being used for that development. Many reserves are, in fact, so large that it is quite impossible for the industries concerned to use them for the development and expansion of their business. So what do they want them for?

Viscount Hinchingbrooke: They lose the lot.

Mr. Houghton: I trust that the tortuous mind of the business element on the benches opposite will not try to confuse a perfectly simple analysis of what is the true position. All reserves cannot be fully employed for the development of business enterprises, and they are either distributed or held in reserve and invested.
May I make this suggestion about dividend limitation? Because of the desire of many firms to limit their dividend distribution, they have acquired inflated reserves, and they do not wish to carry out any distribution because they do not desire to violate the voluntary policy of dividend limitation. They cannot employ these reserves usefully in their business, and they are holding them either in the bank or by way of investment.
I said that in some case increased taxes on profits will come out of reserves, but by no means in all cases will that additional charge to reserves be of the greatest possible harm or of infinite harm—phrases used by the hon. Member for Farnham (Mr. Nicholson)—to business.

Mr. Nicholson: The hon. Member is trying to clear up misconceptions but he seems to be getting deeper into the mire.

There is one misconception that he might well clear up. He has been talking about reserves. When I used that expression I meant the part of the profits that is going to be put to reserve. Does the hon. Member mean the already accumulated reserves?

Mr. Houghton: As my hon. Friend the Member for Blackley (Mr. Diamond) pointed out, I thought with devastating simplicity the other day, profits are a pool out of which a business does a variety of things. Out of that pool it may put money to reserve for replacement, development or expansion. Out of that pool of profits it may allocate a certain sum to dividend distribution and it may allocate commissions to directors according to the terms of their service agreements. In that pool it may have a sum which is not necessary for reserves and which, under the observance of dividend limitation, it is undesirable to distribute. Therefore, out of that nucleus, the additional Profits Tax can be paid without the slightest harm to anybody and without impairing the efficiency of that industry or reducing the profit income of the shareholders.

Viscount Hinchingbrooke: What about the effect on the price of Government stock?

Mr. Houghton: I decline to be diverted by the red herrings that are being drawn across my path. I am coming to my conclusion. I said that in some cases the additional Profits Tax upon distributed profits will come out of reserves. In some cases it may be quite unharmful but in other cases, it must be admitted, it may bring some inconvenience to the business undertaking because of its special circumstances. In that regard, the Chancellor of the Exchequer said that this tax was an act of rough justice. He conceded that it could not operate fairly and that its incidence would not be equitable, over the whole field of industry.
There is no gainsaying that this tax will come from one of three sources: by reduced dividend distribution which in some cases would do no harm because the dividend is already excessive; in some cases it can come from reserves without harm to the industry, its development or its expansion; thirdly, and this is what will happen in many cases as we can see from the financial newspapers and


the finance columns every day of the week, it can come out of the increased profit which flows directly from devaluation of the pound and is not in any way the reward of additional enterprise or more imagination in the export market. It will go to those who just sit and rake in the shekels. There is no doubt about it. [Interruption.] Of course they do. The whisky distillers are just going to sit there raking in the shekels.

Mr. Selwyn Lloyd: The hon. Member must not forget that the Chancellor of the Exchequer is going to rake in more than 10s. in the pound from them.

Mr. Houghton: Of course he is. What do we think the Chancellor of the Exchequer is there for? I am dealing with the gloomy speeches, uttered in sepulchural tones, which are coming from the other side about the grave and infinite harm—the actual word used by the hon. Member for Farnham (Mr. Nicholson)—which will be done by this proposal. I have sought to point out that the tax on the undistributed portion of the profits remains exactly the same under the Bill as it was before, and that the only additional charge is a 5 per cent. increase on that portion of profits which is distributed. What all this fuss is about I really do not know.

Mr. Molson: I would ask the hon. Gentleman whether, when he talks about whisky distillers sitting and raking in the the shekels, he is criticising or blaming them for doing so. Does he not remember that the Chancellor of the Exchequer expressed the hope that in all cases where it was possible to maintain the full price traders should do so?

Mr. Houghton: Yes, and I was not blaming anyone. I was merely stating the facts. It is hon. Gentlemen opposite who are blaming the Chancellor for taxing these profits. That is what I criticise.

5.15 p.m.

Sir Peter Bennett: Despite what has been said from the other side, I shall have no difficulty whatever in supporting the Amendment. I believe that if it were carried it would be for the ultimate good of the country. The hon. Member for Sowerby (Mr. Houghton) has made a number of points, to some of which we can take no exception, while we very much differ from some

of his other conclusions. The fact that there is a small section of people who will get additional profit without effort—and whether they will do it I do not know—should not be made the reason for penalising in advance a great many people who are going to suffer. That is the kind of argument which I cannot understand. I have said before, I have told the Chancellor and I say now, that this is not rough justice. It is very rough and there is no justice in it.
I come from a city of small trades and, I can assure the hon. Member that they do not sit down and rake in. Nothing flows in to them; they have to go out and get it. The hon. Member for Taunton (Mr. Collins) suggested an appeal to profit takers, who he thought should be willing to make some sacrifices in order to share in the general effort. I was looking round for the hon. Member for Ipswich (Mr. Stokes).

Mr. Cecil Poole: Or the hon. Member for Abingdon (Sir R. Glyn).

Sir P. Bennett: The hon. Member for Ipswich has been at some pains to explain that shareholders are not exactly having a splendid time if we compare postwar with pre-war conditions. [HON. MEMBERS: "Oh."] Well, the figures are available. The amount of dividend paid before and after the war shows that the rise in dividends is very small compared to the rise in the amount paid to the producers. If you also take taxation into account it means that the people who are living on dividends are worse off, and that the people who earn their living are better off, than before. [HON. MEMBERS: "Hear, hear."] Wait a minute. I am not grumbling. I am only stating the facts. The hon. Member for Taunton should not come forward and suggest that the man who has been living on dividends is rolling in luxury and ought to be willing to make sacrifices.

Mr. Collins: I know that the hon. Member will forgive me for interrupting him, but I think he is misrepresenting entirely what I said. I made no such suggestion about men rolling in dividends. What I said and what I meant was that, in the main, it is the workers who earn the dividend and not the profit taker, and that generally speaking, the profit taker is better off than the worker. Consequently, the worker under present


conditions is making a greater sacrifice in proportion, than is being made by the one who takes the profit.

Sir P. Bennett: I was trying to show the reverse. [Laughter.] Well, the figures are there and hon. Members should study them. No doubt I shall be pardoned for upholding the class to which I belong. Anyone would imagine that the worker earned his money entirely on his own. Let me tell the House that I took over a business in 1920 when the workers were wandering the streets and begging for work. [HON. MEMBERS: "Because of Tory misrule."] It has nothing to do with Tory misrule. There was unemployment all over the world, in America and elsewhere, in places where there was no Tory rule at all. They were honest to goodness men who did not know how to earn their own living. Work had to be provided for them; some one had to go out and do it, and I am one of those who have spent their lives trying to find work for men who were incapable of doing it for themselves. We do not apologise for the success we have had in doing that; at least, I do not. When I took over, there were 2,800 employed in the business; there are 35,000 today. That is my life's work and I do not apologise for it.
I am sorry, Mr. Bowles, for making this personal reference but what was said rather got under my skin. The hon. Member for Taunton suggested that it was almost immoral to expect replacement cost to be included in the final cost and charged to the purchaser, but, of course, the replacement cost is part of the cost and it must be charged to the consumer; otherwise what will happen eventually—

Mr. Collins: I did not refer to replacement; I referred to costs of expansion. It might interest the hon. Gentleman to know that at precisely the same time when he was doing what he did in 1920, I did the same thing on not quite such a big scale, but the business increased from three men to some hundreds of men. The only difference between the hon. Gentleman and myself is this: although the businesses which I control are quite prosperous and have a moderately high repute, I think I have a moral obligation, as the governing director, not to distribute dividends to others than the workers who produce them.

Sir P. Bennett: I do not own the capital. The hon. Gentleman is probably in the happy position of owning all the capital. I am only a paid servant.
Coming back to the point, it has been suggested that there is something wrong in putting large amounts to reserve and then using them for financing the business. I say that if one does not do that, the business will eventually go down. One of the things which the Americans are saying to us all the while is that we do not do enough of that. We do not replace our plant quickly enough. They say that the way to do it is to put a charge on the goods and get the money from the consumer, and then bring the plant up to date, and work to reduce the costs so that in the long run the consumer gets the benefit. I sincerely believe that that is correct.
This is a very real point. I know industries which have studied this matter scientifically as against the old hit-and-miss methods of the laissez faire days. Many of our industries have had to have working parties set up to consider the situation because the principle of replacement and having ample reserves had not been studied. Depreciation allowances went into the general till and were so used for general purposes; the plants ran down and then there was not the wherewithal to replace them. I know of companies on the other hand, which have gone into the matter scientifically, and they have decided that at a certain time the plant should be replaced. During the last three years owing to the rise in the cost of the plant, and because it is not permissible to charge the full amount needed to depreciation, it has not been possible to do what the Americans are urging us to do and what we ought to do if we are to keep up to date and live in this fight.
Therefore, it will be seen why I am in favour, in the national interest, of supporting this Amendment. It would help to relieve this depreciation shortage, as more would be put to reserve. It would be for the benefit of the whole of industry, on which the workers depend as well as everyone else.

The Economic Secretary to the Treasury (Mr. Jay): I will endeavour to remain strictly within the terms of this Amendment which, as I understand it, seeks to reduce the Profits Tax on undistributed profits from 10 per cent. to 8 per cent.


The right hon. Member for Saffron Walden (Mr. R. A. Butler) started by asking me what would be the cost of this Amendment to the Exchequer. He had not got the figures exactly right; the actual cost would be £21 million gross and, after allowance for Income Tax, £12 million net. Therefore, he was approximately correct in suggesting that if we accepted this Amendment there would only be £1 million additional revenue left to the Exchequer as a result of the tax.

Mr. Nicholson: How is that calculated? Surely it depends on so many factors, such as the amount in distributed profits. It is a very difficult calculation. Would the hon. Gentleman enlighten the Committee as to how it is made?

Mr. Jay: No doubt it depends on many things, but this is the best estimate the Inland Revenue can make. In so far as the Amendment would deprive the Exchequer of all the extra revenue, one can, I suppose, describe it as a wrecking Amendment, as the right hon. Gentleman so described it.
On the other hand, I do not take quite so strong an objection—though I do object—to the Amendment, as to the proposals of the Opposition on the Second Reading, that we should not raise the tax on distributed profits. There is this distinction. This Amendment would probably provide a slightly greater incentive to put profits to reserve, rather than to pay them out in dividends. The right hon. Gentleman asked me what the Government's attitude was, and whether we favoured the placing of profits to reserve by the industrial companies. Of course we do. Indeed, it was this Government which initiated the differentiation between the rate of tax on the distributed and undistributed profits. We also introduced dividend limitation which, in itself, has tended to ensure that profits were put to reserve.
Surely the issue is not whether in general we are in favour of prudent company finance. The issue is whether this particular Amendment is necessary to ensure that sufficient sums are put to reserve by industrial companies generally. It is there that I disagree with the right hon. Gentleman. As my hon. Friend the Member for Sowerby (Mr. Houghton) said, the fact is that the Profits Tax

increase over the last year or two has largely been paid out of increased profits, and my expectation is that this increase will also be so paid.
One has only to look at the figures in the White Paper on National Income which show that as between 1938 and 1948 the total income of companies has increased from £763 million to £1,945 million, that the amount paid out in dividend has increased from £506 million to £730 million, and that the amount paid in taxes has increased from £87 million to £670 million. Finally, the additions to free reserve have also gone up from £170 million to £545 million. Indeed, in the last year, between 1947 and 1948, the addition to the reserve went up from £425 million to £545 million. Therefore, the fact is that profits, sums placed in reserve, and the amounts paid out in taxation have all increased at the same time.
The right hon. Gentleman sought to argue that the money at present available for reserve was insufficient, by quoting various figures, partly from an article by Mr. Chambers, and also from other sources, suggesting that there was a gap of £200 million or £300 million between what was necessary for replacement and what was actually available. I do not admit in principle that there can be such a gap, if the matter is regarded from the point of view of the whole life of the plant. Over the whole life of the plant in question the whole amount is written off out of the sums paid in taxation. Therefore, over that period there cannot really be such a gap.
5.30 p.m.
It may be argued that in a particular year, when the price of plant and equipment has been rising, there may be difficulty in that year in replacement at high prices, but it was precisely to meet that criticism that in the Budget last summer we made the very considerable concession of doubling the initial allowance for wear and tear. That was a very large concession, which will cost the Exchequer about £75 million in a full year, in remission of taxation to companies.

Mr. Erroll: Will not the Chancellor of the Exchequer get it all back again later?

Mr. Jay: It is quite true that it takes the form of an interest-free loan.

Sir P. Bennett: The amount of the plant will certainly be recovered if one starts to depreciate at the full value from the day one bought it, but what about the years gone by when we were only allowed to depreciate at the old price and the fact that we are now facing two to three times the amount of replacement? That is a very real problem to us.

Mr. Jay: The answer to that is that in those years bigger and bigger sums have been placed to reserve. I remember my hon. Friend the Member for Reading (Mr. Mikardo) arguing about the initial allowance, that it was not necessary to make the concession this year at all because at present we are in a period when, as the capital cuts show, it is on the whole necessary to restrain physical development by industry rather than to encourage it. The Government did not take that view. We took the view that the concession on the initial allowance was justified, but we certainly do not think that there is any case for going still further and, as the Amendment would do, providing a further concession for that purpose.
It might be argued that, even though there was no need arising from the immediate problem of replacement by industry, nevertheless some remission of this kind and some increase in sums placed to reserve by companies was necessary because of the need, which I fully admit, for greater National Savings as a whole in the fight against inflation. The Amendment would not result in any net increase in National Savings in that sense. Whereas it would mean larger sums in the hands of industrial companies, it would reduce the Budget surplus by exactly the same amount, or, alternatively, if there was a deficit, increase the Budget deficit. There is therefore really no economic argument on those grounds for the Amendment. It is really an issue of social rather than economic policy. The Amendment would transfer the ownership of these savings from the taxpayer as a whole to the shareholders of the companies concerned.
One is bound to recall, in answer to the arguments of the Opposition today, that the whole question of companies' reserves, which arises on the Amendment, raises not merely an issue of economic

policy, company investment and so forth, but also an issue of the distribution of property in the community. My hon. Friend the Member for Sowerby was right when he pointed that out, and so was my hon. Friend the Member for Central Southwark (Mr. Jenkins) on Second Reading, when he pointed out that if wage earners forgo a claim for increased wages they forgo that amount for good, but if the shareholder forgoes his claim for a higher dividend and the sum is placed to reserve, that asset remains the property of the shareholder and over a period of years his capital appreciates in value, and in one way or another he takes a capital profit.

Mr. Selwyn Lloyd: Does the hon. Gentleman agree with the conclusion of his hon. Friend the Member far Central Southwark (Mr. Jenkins) about the necessity for a capital levy some years hence?

Mr. Jay: No, Sir. I do not agree with that conclusion, but the premise was perfectly correct. It is true that in so far as these sums are placed to company reserves, which may be a good thing from the point of view of company finance, it also affects the distribution of property in the community; in the next stage, of course, as my hon. Friend pointed out, we may perhaps have a bonus issue. Hon. Gentlemen opposite, and the accountants, point out, quite correctly, that it is no more than the nominal transfer to the shareholders, in one form, of assets which were their property already. Other people complain that the total market value of the shares goes up as a result, and that a capital profit accrues to the shareholders. That is merely an outward and visible sign of the fact that these sums are accruing in this way to the holders of stock in these companies.
For that reason we must look at this question not only from the economic point of view, but also from the point of view of its effect on the distribution of property. That is a reason for not going too far in encouraging, by taxation, the placing by companies of sums to reserve, over above what is necessary and possible, in present economic circumstances, for legitimate replacement and re-equipment. For these reasons we ask the Committee to reject the Amendment.

Mr. Osbert Peake: The speech of the Economic Secretary has made it clear to the Committee—I am very glad that it has made it clear—that there is really no argument in principle which either the Government or any Government supporter can with any possible reason advance against the Amendment. The Profits Tax was fixed in 1947 at a rate of 12½ per cent. on distributed and 7½ per cent. on undistributed profits. There was at that time a gap of 5 per cent. between the rates on distributed and undistributed profits. Ever since then, whenever a change has been made in the rate of Profits Tax; it has been by way of increasing the gap between the rates on distributed and undistributed profits.
The present rate is 25 per cent. on distributed and 10 per cent. on undistributed profits, with a gap of 15 per cent. between the two, and the Bill proposes to carry the Government policy of widening the gap between the rates on distributed and undistributed profits even further. It makes the gap which is now 15 per cent. into a gap of 20 per cent. by a distributed Profits Tax rate of 30 per cent. and an undistributed rate of 10 per cent. All that the Amendment proposes to do, despite all we have heard advanced against it, mostly by way of misunderstanding from back benches opposite, is to substitute a gap of 22 per cent. for the gap of 20 per cent. which the Government have now fixed.
In his Second Reading speech, the Economic Secretary, when interrupted by my hon. Friend the Member for Farnham (Mr. Nicholson), said:
And may I remind the hon. Member that in the Finance Bill Debates in June, 1948, his hon. Friend the Member for Chippenham (Mr. Eccles) argued on an Amendment by the Opposition that the widening of this margin would increase the incentive to put moneys to reserve, which is precisely what I am arguing now."—[OFFICIAL REPORT, 3rd November, 1949; Vol. 469, c. 609.]
The hon. Gentleman was arguing that it would be a good thing to increase the gap between the rate of tax on distributed and on undistributed profits. All we are trying to do today from this side of the Committee is what the Government have done three times already, and to carry further a step which they are themselves taking in this Bill.

Mr. Chamberlain: Surely that is not the only effect of this Amendment? It has been conclusively shown here that the effect is also to reduce to a mere £1 million the effect of the whole tax.

Mr. Peake: I was just coming to that point. So far as the principle is concerned, we are doing in this Amendment what successive Governments have done ever since the Profits Tax was introduced in 1946, and we are simply increasing by 2 per cent. the gap which the Government now propose should be 20 per cent. instead of 15 per cent.
The effect of our proposal is that there will be no net diminution on balance in the amounts allocated to the reserves of industrial undertakings. We think that is a good thing, and it is on this point that the real argument arises between us and those who have spoken in support of the Government. We think it is much better for this sum of £11 million or £12 million to remain in the reserves of industrial undertakings than for it to be taken by the Chancellor and expended as part of his current expenditure. If that sum remains in the reserves of industrial undertakings it cannot be wastefully spent at this time because no capital expenditure can be undertaken without licences from Government Departments, and physical controls exist which prohibit altogether a wasteful expenditure of sums allocated to reserve.
It follows, therefore, that until such time as these reserves are required for renewals or for developments and for the rehabilitation of the industry in which the money is saved, they have to be invested in some form of securities. That means that the money will be used for a useful purpose, which would do a great deal to restore confidence at the present time. For it is perfectly clear from the trend of things on the Stock Exchange that Government securities are much in need of bolstering up at present. We think it would be far better for this sum to be available for use in years to come when required and, in the meantime, to be used for sustaining the credit of the Government by investment in Government stocks than that it should be used for the current expenditure of His Majesty's Government.

Question put, "That 'twenty' stand part of the Clause."

The Committee divided: Ayes, 262; Noes, 125.

Division No. 275.]
AYES
[5.48 p.m.


Acland, Sir Richard
Field, Capt. W. J.
Mathers, Rt. Hon. George


Adams, Richard (Balham)
Follick, M.
Mellish, R. J.


Albu, A. H.
Foot, M. M.
Messer, F.


Allen, A. C. (Bosworth)
Forman, J. C.
Middleton, Mrs. L.


Allen, Scholefield (Crewe)
Fraser, T. (Hamilton)
Mitchison, G. R.


Alpass, J. H.
Gallacher, W.
Monslow, W.


Anderson, A. (Motherwell)
Ganley, Mrs. C. S.
Morgan, Dr. H. B.


Attewell, H. C.
Gibson, C. W.
Morley, R.


Austin, H. Lewis
Gilzean, A.
Morris, Lt.-Col. H. (Sheffield, C.)


Awbery, S. S.
Glanville, J. E. (Consett)
Morris, P. (Swansea, W.)


Ayles, W. H.
Gooch, E. G.
Murray, J. D.


Ayrton Gould, Mrs. B.
Goodrich, H. E.
Nally, W.


Balfour, A.
Gordon-Walker, P. C.
Naylor, T. E.


Barslow, P. G.
Greenwood, A. W. J. (Heywood)
Neal, H. (Claycross)


Barton, C.
Grenfell, D. R.
Nicholls, H. R. (Stratford)


Battley, J. R.
Grey, C. F.
Noel-Buxton, Lady


Bechervaise, A. E.
Grierson, E.
Oldfield, W. H.


Benson, G.
Griffiths, D. (Rother Valley)
Oliver, G. H.


Berry, H.
Griffiths, Rt. Hon. J. (Llanelly)
Paling, Will T. (Dewsbury)


Beswick, F.
Griffiths, W. D. (Moss Side)
Palmer, A. M. F.


Bevan, Rt. Hon. A. (Ebbw Vale)
Gunter, R. J.
Pannell, T. C.


Bing, G. H. C.
Guy, W. H.
Parker, J.


Blackburn, A. R.
Hale, Leslie
Parkin, B. T.


Blenkinsop, A.
Hall, Rt. Hon. Glenvil
Paton, Mrs. F. (Rushcliffe)


Blyton, W. R.
Hamilton, Lieut.-Col. R.
Pearson, A.


Boardman, H.
Hardy, E. A.
Peart, T. F.


Bottomley, A. G.
Hastings, Dr. Somerville.
Piratin, P.


Bowden, H. W.
Haworth, J.
Poole, Cecil (Lichfield)


Braddock, Mrs. E. M. (L'pl. Exch'ge)
Herbison, Miss M.
Popplewell, E.


Braddock, T. (Mitcham)
Hobson, C. R.
Porter, E. (Warrington)


Bramall, E. A.
Holman, P.
Porter, G. (Leeds)


Brook, D. (Halifax)
Holmes, H. E. (Hemsworth)
Price, M. Philips


Broughton, Dr. A. D. D.
Houghton, Douglas
Proctor, W. T.


Brown, George (Belper)
Hoy, J.
Pryde, D. J.


Brown, T. J. (Ince)
Hubbard T.
Ranger, J.


Burden, T. W.
Hudson, J. H. (Ealing, W.)
Rankin, J.


Burke, W. A.
Hughes, Emrys (S. Ayr)
Rhodes, H.


Callaghan, James
Hughes, Hector (Aberdeen, N.)
Ridealgh, Mrs. M.


Chamberlain, R. A.
Hughes, H. D. (W'lverh'pton, W.)
Roberts, Goronwy (Caernarvonshire)


Chetwynd, G. R.
Hutchinson, H. L. (Rusholme)
Robertson, J. J. (Berwick)


Cluse, W. S.
Hynd, J. B. (Attercliffe)



Cobb, F. A.
Irvine, A. J. (Liverpool)
Robinson, Kenneth (St. Pancras, N.)


Cocks, F. S.
Irving, W. J. (Tottenham, N.)
Rogers, G. H. R.


Coldrick, W.
Isaacs, Rt. Hon. G. A.
Ross, William (Kilmarnock)


Collick, P.
Jay, D. P. T.
Sargood, R.


Collindridge, F.
Jeger, G. (Winchester)
Scollan, T.


Collins, V. J.
Jeger, Dr. S. W. (St. Pancras, S. E.)
Scott-Elliot, W.


Colman, Miss G. M.
Jenkins, R. H.
Shackleton, E. A. A.


Cook, T. F.
John, W.
Sharp, Granville


Corbet, Mrs. F. K. (Camb'well, N. W.)
Johnston, Douglas
Shurmer, P.


Corlett, Dr. J.
Jones, D. T. (Hartlepool)
Silverman, S. S. (Nelson)


Cove, W. G.
Kenyon, C.
Simmons, C. J.


Crossman, R. H. S.
Kinley, J.
Skeffington-Lodge, T. C.


Cullen, Mrs.
Kirkwood, Rt. Hon. D.
Skinnard, F. W.


Daines, P.
Lang, G.
Smith, C. (Colchester)


Davies, Edward (Burslem)
Lavers, S.
Smith, Ellis (Stoke)


Davies, Harold (Leek)
Lee, Miss J. (Cannock)
Smith, H. N. (Nottingham. S.)


Davies, Haydn (St. Pancras, S. W.)
Leonard, W.
Smith, S. H. (Hull, S. W.)


Davies, R. J. (Westhoughton)
Leslie, J. R.
Snow, J. W.


Davies, S. O. (Merthyr)
Lewis, A. W. J. (Upton)
Solley, L. J.


Deer, G.
Lewis, T. (Southampton)
Sparks, J. A.


Delargy, H. J.
Lipton, Lt.-Col. M.
Steele, T.


Diamond, J.
Longden, F.
Swingler, S.


Dodds, N. N.
Lyne, A. W.
Sylvester, G. O.


Driberg, T. E. N.
McAdam, W.
Symonds, A. L.


Dugdale, J. (W. Bromwich)
McAllister, G.
Taylor, H. B. (Mansfield)


Dumpleton, C. W.
McGhee, H. G.
Taylor, R. J. (Morpeth)


Dye, S.
McGovern, J.
Taylor, Dr. S. (Barnet)


Ede, Rt. Hon. J. C.
Mack, J. D.
Thomas, D. E. (Aberdare)


Edelman, M.
McKay, J. (Wallsend)
Thomas, Ivor Owen (Wrekin)


Edwards, Rt. Hon. Sir C. (Bedwellty)
McKinlay, A. S.
Thomas, John R. (Dover)


Edwards, Rt. Hon. N. (Caerphilly)
Maclean, N. (Govan)
Thorneycroft, Harry (Clayton)


Evans, Albert (Islington, W.)
McLeavy, F.
Thurtle, Ernest


Evans, E. (Lowestoft)
MaoPherson, Malcolm (Stirling)
Tiffany, S.


Evans, John (Ogmore)
Mallalieu, E. L. (Brigg)
Timmons, J.


Ewart, R.
Mallalieu, J. P. W. (Huddersfield)
Tolley, L.


Fairhurst, F.
Mann, Mrs. J.
Turner-Samuels, M.


Farthing, W. J.
Manning, Mrs. L. (Epping)
Viant, S. P.


Fernyhough, E.
Marquand, Rt. Hon. H. A.
Walkden, E.




Wallace, G. D. (Chislehurst)
White, H. (Derbyshire, N. E.)
Williams, W. R. (Heston)


Wallace, H. W. (Walthamstow, E.)
Whiteley, Rt. Hon. W.
Willis, E.


Warbey, W. N.
Wigg, George
Wills, Mrs. E. A.


Watkins, T. E.
Wilkes, L.
Woods, G. S.


Watson, W. M.
Wilkins, W. A.
Young, Sir R. (Newton)


Webb, M. (Bradford, C.)
Willey, F. T. (Sunderland)
Younger, Hon. Kenneth


Weitzman, D.
Willey, O. G. (Cleveland)



Wells, P. L. (Faversham)
Williams, D. J. (Neath)
TELLERS FOR THE AYES:


Wells, W. T. (Walsall)
Williams, J. L. (Kelvingrove)
Mr. Joseph Henderson and


Wheatley, Rt. Hn. John (Edinb'gh, E.)
Williams, Ronald (Wigan)
Mr. Hannan.




NOES


Amory, D. Heathcoat
Harris, H. Wilson (Cambridge Univ.)
Nutting, Anthony


Astor, Hon. M.
Harvey, Air-Comdre. A. V.
O'Neill, Rt. Hon. Sir H.


Baldwin, A. E.
Head, Brig. A. H.
Orr-Ewing, I. L.


Barlow, Sir J.
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Peake, Rt. Hon. O.


Bennett, Sir P.
Hinchingbrooke, Viscount
Peto, Brig. C. H. M.


Birch, Nigel
Hollis, M. C.
Pickthorn, K.


Boles, Lt.-Col. D. C. (Wells)
Hudson, Rt. Hon. R. S. (Southport)
Ponsonby, Col. C. E.


Bowen, R.
Hulbert, Wing-Cdr. N. J.
Prescott, Stanley


Boyd-Carpenter, J. A.
Hutchison, Col. J. R. (Glasgow, C.)
Prior-Palmer, Brig. O.


Bracken, Rt. Han. Brendan
Jeffreys, General Sir G.
Raikes, H. V.


Braithwaite, Lt.-Cmdr. J. G.
Joynson-Hicks, Hon. L. W.
Reed, Sir S. (Aylesbury)


Bromley-Davenport, Lt.-Col. W.
Keeling, E. H.
Roberts, Emrys (Merioneth)


Brown, W. J. (Rugby)
Kendall, W. D.
Roberts, H. (Handsworth)


Buchan-Hepburn, P. G. T.
Kerr, Sir J. Graham
Roberts, P. G. (Ecclesall)


Bullock, Capt. M.
Lambert, Hon. G.
Robertson, Sir D. (Streatham)


Butcher, H. W.
Legge-Bourke, Maj. E. A. H.
Robinson, Roland (Blackpool, S.)


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Lennox-Boyd, A. T.
Ross, Sir R. D. (Londonderry)


Byers, Frank
Lindsay, M. (Solihull)
Savory, Prof. D. L.


Carson, E.
Linstead, H. N.
Scott, Lord W.


Challen, C.
Lloyd, Selwyn (Wirral)
Shepherd, W. S. (Bucklow)


Channon, H.
Low, A. R. W.
Spearman, A. C. M.


Corbett, Lieut.-Col. U. (Ludlow)
Lucas-Tooth, Sir H.
Stewart, J. Henderson (Fife, E.)


Crookshank, Capt. Rt. Hon. H. F. C.
MacAndrew, Col. Sir C.
Stoddart-Scott, Col. M.


Crosthwaite-Eyre, Col. O. E.
McFarlane, C. S.
Strauss, Henry (English Universities)


Crowder, Capt. John E.
Mackeson, Brig. H. R.
Stuart, Rt. Hon. J. (Moray)


Darling, Sir W. Y.
McKie, J. H. (Galloway)
Thorneycroft, G. E. P. (Monmouth)


Digby, S. Wingfield
Maclay, Hon. J. S.
Thornton-Kemsley, C. N.


Donner, P. W.
Maclean, F. H. R. (Lancaster)
Thorp, Brigadier R. A. F.


Drewe, C.
MacLeod, J.
Touche, G. C.


Eccles, D. M.
Macmillan, Rt. Hon. Harold (Bromley)
Turton, R. H.


Elliot, Lieut.-Col. Rt. Hon. Walter
Macpherson, N. (Dumfries)
Tweedsmuir, Lady


Erroll, F. J.
Maitland, Comdr. J. W.
Vane, W. M. F.


Fleming, Sqn.-Ldr. E. L.
Manningham-Buller, R. E.
Wakefield, Sir W. W.


Fletcher, W. (Bury)
Marlowe, A. A. H.
Wheatley, Colonel M. J. (Dorset, E.)


Fox, Sir G.
Marples, A. E.
Williams, C. (Torquay)


Fraser, H. C. P. (Stone)
Marshall, D. (Bodmin)
Willoughby de Eresby, Lord


Fraser, Sir I. (Lonsdale)
Mellor, Sir J.
Winterton, Rt. Hon. Earl


Galbraith, Cmdr. T. D. (Pollok)
Molson, A. H. E.
York, C.


Gomme-Duncan, Col. A.
Morrison, Maj. J. G. (Salisbury)
Young, Sir A. S. L. (Partick)


Granville, E. (Eye)
Neven-Spence, Sir B.



Gridley, Sir A.
Nicholson, G.
TELLERS FOR THE NOES:


Hare, Hon. J. H. (Woodbridge)
Nield, B. (Chester)
Mr. Studholme and Major Conant.


Harris, F. W. (Croydon, N.)
Noble, Comdr. A. H. P.

Mr. Peter Thorneycroft: I beg to move, in page 2, line 48, at the end, to add:
(6) This section shall not apply to such proportion of the taxable profits of a body corporate, unincorporated society or other body as bears the same relation to the total taxable profits of the said body as the value of its sales to hard currency areas bears to its total turnover.
The object of this proposed new subsection can be quite simply described. It is that the more trade a firm does with a dollar or a hard currency country, the less of the new additional tax it has to pay. As an example, a firm which does half its business with the U.S.A.—which is what we want firms to do—would pay only half the additional tax which the Bill imposes.
It is, of course, possible to adduce a number of technical arguments and administrative difficulties against the Amendment. One of these, which may come at once to the minds of most hon. Members, is that a firm engaged in making component parts would not be able to derive the same benefit as the firm making the finished article and exporting it to the United States. The most I would claim for the Amendment would be that it was rough justice. [Laughter.] I hardly think, however, that the Economic Secretary is at liberty to attack me on that score. I hope very much that whoever replies to the discussion will deal not only with the technical and administrative points involved, but with the


principle of whether a firm actually engaged in trading with the dollar area, which everybody wants it to do, should or should not be given some special advantage for doing so.
In order to present to the Committee the arguments for the Amendment it is necessary for me to recall the two main points which the Government have made in support of the Clause. Their first point was that the additional tax was designed to penalise those who do extra business in North America.

Mr. Glenvil Hall: Who said that?

Mr. Thorneycroft: I will tell the right hon. Gentleman presently—I have my authority. The second point was that it was to placate the trade unions. They were both thoroughly bad points. I do not intend to deal with the second one because it would be wholly out of Order on the Amendment. We have already expressed our views about the type of political appeasement which leads to an action of that character.
I want to say something about the penalising of those who do extra business in America. The right hon. Gentleman the Financial Secretary put it all very much better than I could have done. We all respect him in the House of Commons. He has had the unenviable task of serving two of the worst Chancellors of the Exchequer, and he has served them very well indeed. In the Second Reading Debate he put the matter with remarkable clarity. He said:
A good many of the points made by hon. Members on the other side of the House have been based on the assertion that my right hon. and learned Friend is increasing this tax in order to penalise those who would do extra business in North America, and who will make additional profits—[HON. MEMBERS: 'He said so.'] I know he did. I have read the speeches of my right hon. and learned Friend just as have hon. Members opposite. He indicated that that was one reason why he considered that this tax was necessary and desirable; but it is not his only reason."—[OFFICIAL REPORT, 3rd November, 1949; Vol. 469, c. 726.].
The right hon. Gentleman then went on to describe the other reason, to which I have referred and which we have already debated and is out of Order.

Mr. Glenvil Hall: What the hon. Member says is quite right. In that Debate I obviously, on the spur of the moment, used the word "penalise." To do my

right hon. and learned Friend justice, however, I cannot charge my memory that he himself used the word "penalize" and, therefore, it should not-go forth that because I used that phrase the Chancellor, therefore, used it and that that was his reason for increasing the tax. What I think the Chancellor did say—I am paraphrasing—was that it was right and proper that those making extra profits in North America should pay extra tax on them.

6.0 p.m.

Mr. Thorneycroft: I am going to withdraw some of the favourable comments I have made about the right hon. Gentleman. Whatever may be said about his right hon. and learned Friend, I thought I was entitled to assume that he meant what he said. The right hon. Gentleman made it perfectly plain, as indeed it was perfectly plain from the speech of his right hon. and learned Friend—which he claimed to have read, although he did not suggest his hon. Friends behind him had read it—that one of the main objects of the tax was to claw back some of the additional profits which might be made by those who exported to the dollar area. He adopted, and quite rightly adopted, the word "penalise" in it. We regard that policy as both mischievous and silly.
We think it a futile way of carrying on the government of this country to make bombastic speeches on the wireless urging people to go all out in a drive to sell goods in the dollar area and then for the right hon. and learned Gentleman to come to this House and admit that one of the first reasons for this Clause was to penalise those who in fact carried out those instructions. If one wants a man or a firm to do something there are only two ways of getting it done. One is by using some measure of compulsion and the other is by giving some additional reward. In the whole history of our human affairs no one has found other ways of getting these things done, particularly when the thing we want done is one which involves quite a considerable risk. Let no one under-estimate the risks which have to be taken in trying to break into some of these hard currency markets.
I know there are hon. and right hon. Gentlemen on the other side of the Committee who want to use the weapon of direction in this matter. The Home


Secretary wants to use it. I am sorry he is not in the Committee now. He made it perfectly plain in a speech the other day. The Home Secretary said "it was essential that our principal industries should be directed to serving the nation's purpose and not in contradictory purposes that might be more attractive to private owners. We were faced with the difficulty of ensuring that the goods available for export should be sent directly to those places from which our imports were to come." He does not appear to share the enthusiasm of the Chancellor of the Exchequer for multilateral trade. He went on:
We are making an appeal to goodwill, and I hope that goodwill will be forthcoming. But if goodwill is not sufficient to ensure our survival, it may be necessary to direct the policy of planning over a wider range than we have at present applied it.
[HON. MEMBERS: "Hear, hear."] Hon. Members cheer and that is a perfectly logical and arguable case, that I would not deny for a moment. It was the method by which Nazi Germany, before the war, tried to direct her products into the export field. It is the only way by which a National Socialist system—and this Government is becoming more National Socialist every day—could ever direct exports into the foreign field. It ended in Nazi Germany and has ended in Soviet Russia, with the machine gun and the concentration camp.

Mr. Tolley: On a point of Order, Mr. Deputy-Chairman. What has this to do with the Amendment before us?

The Deputy-Chairman (Mr. Bowles): The hon. Member for Monmouth (Mr. P. Thorneycroft) is going on soon, I think, to say that the other alternative is by altering the tax between what goes to America and what does not.

Mr. Thorneycroft: If I may say so with respect, you have taken the words out of my mouth. If the hon. Member for Kidderminster (Mr. Tolley) had only waited a little longer, he would have realised that I was about to argue that, of course, there is another way of doing it. The tragedy of the Government is that they have adopted neither method. They have sat in the middle hoping for something to happen. That is why, when

they set a target for increased manpower, or something of that kind, it is not reached and the figures go down, instead of up, or go up, instead of down. The time is surely coming when they will have to make up their minds whether they are to adopt the view so enthusiastically cheered by hon. Members below the Gangway and supported by the Home Secretary, or do something of the kind suggested by this Amendment.
We say that at the present time every encouragement ought to be given to those who try to get exports into the dollar markets. We maintain, and I think there is some substance in it, that to try to break into those markets involves a very great deal of commercial risk, if a firm which has been trading for many years with what are now known as soft currency countries is told to give up its old selling arrangements and its customs and should try to divert its trade to this new world. If it succeeds it may be met with an increase in tariffs and will almost certainly have to face increased competition by one of the finest industrial nations on earth. If men are to take that risk they should get reward and encouragement and, whatever happens, they should not be "penalised," in the words of the right hon. Gentleman, for doing what everyone wants them to do.
Recently the Chancellor of the Exchequer went to Washington and discussed with the United States of America what steps could be taken in order to assist us to get over some of the difficulties associated with the dollar gap. The communiqué which was issued with the eight or 10 points—I have forgotten how many there were—dealt with the general steps which might be taken on out side of the Atlantic to help us to solve that problem. It said with regard to the sterling area "that in the sterling area it would require the creation of appropriate incentives to exporters to the dollar area." The right hon. and learned Gentleman signed that agreement and came back here. The first thing he does is to set out to penalise them. I do not associate myself with those, not on this side of the Committee, who at times attack the honesty and integrity of the Chancellor of the Exchequer, but I am bound to say that his words are increasingly bearing less and less connection with his actions. It does no good to sign agreements like that in


the United States and then come back and, so far from offering incentives, actually to impose penalties on those carrying out the job.
I believe that if we are to get this very difficult job of selling exports to dollar areas done, we have to give some reward to those who own the industries, those who manage them and those who work in them. Until we do that I do not think we shall get that deflection of our trade which we all desire. This is a paltry Bill and could only cover a narrow section of the field, but I feel that if this Amendment were carried it would do something to remove some of the mischief which the right hon. and learned Gentleman and his colleagues are doing to the economy of this country.

Mr. S. Silverman: I wish to deal with one part only of the speech of the hon. Member for Monmouth (Mr. P. Thorneycroft)—the last part, in which he seemed to me to be returning to an argument advanced a little earlier, not today, by his hon. Friend the Member for Chippenham (Mr. Eccles). That was the argument that we should not do any good in our attempt to increase our sales in hard currency areas unless—and I think I am quoting his words correctly, although I did not write them down—we gave incentives, by which he clearly meant rewards, to the industrialists, the salesmen and the workers in those industries which were concerned with making articles to be sold in hard currency areas.
I wonder whether the hon. Member would do for me what his hon. Friend declined to do on that occasion, because it really is of the utmost importance that we should know what it is that the Opposition are advising us to do about this matter. Does the hon. Member want us to improve the rewards of the workers in the industries which are working for hard currency export markets without increasing the rewards of workers in other industries? Let us deal with the workers' side of it first, as there one sees the argument as clearly. I should like to know whether he is proposing that we should in some way arrange our economy in such a way as to give a bonus to those who work in industries producing for hard currency markets. I do not know whether the hon. Gentleman would like

to answer that or not. It is what he said, and we are entitled to know what he means, if he knows what he means.

Mr. P. Thorneycroft: This is a Debate and not a duet. That is the answer.

Mr. Silverman: Whether it is a Debate or a duet and whether the hon. Gentleman wishes to engage in a Debate or in a duet, he ought at least to be able to contribute to the Debate or the duet something intelligible, otherwise he is neither a duettist nor a debater.
It is most important that we should know whether we are to divert their rewards from those industries which are doing very essential and necessary work and are a vital part of our national economy but which are not producing for the hard currency export market, in order to give a bonus to those who happen to be employed in the other industries. It can be done by such a diversion or by doing what the hon. Member for Chippenham suggested—and I think rather ran away from afterwards or was repudiated by his Front Bench and then began to have second thoughts about it—by saying "Raise everybody's rewards, scrap the White Paper on personal incomes." Is the hon. Member in favour of that? Does he want to maintain restraint on personal expenditure or not? Does he want to prevent inflationary pressure by avoiding increases of wages or does he not want to prevent an increase of inflationary pressure by increases of wages.

The Deputy-Chairman: I must interrupt the hon. Member. He is now going a little wide of the Amendment.

6.15 p.m.

Mr. Silverman: The last thing I wish to do is to extend the area of the Debate. A little earlier this afternoon I did my modest best to attempt to limit the Debate, without much success. The hon. Member was allowed to advance an argument which depended upon the proposition that his Amendment was a good Amendment because it increased the incentives to manufacture for hard currency export markets and to sell those products there. In order to make his argument sound more plausible, because it is quite clear from his refusal to answer that he did not really mean it, he brought the workers into his argument. All that I was doing—and I think one is surely


entitled to do it—was to take that part of the argument he advanced which seemed to me to be the easiest to expose to the Committee, and to deal with that, hoping by so doing to persuade the Committee that if his argument about increasing the incentives to workers was as insincere and hopelessly unjustifiable as it quite clearly is, the same adjectives might not unfairly be used to describe his other proposals because—

The Deputy-Chairman: The hon. Member has missed an opportunity. He might have put down an Amendment himself, but he cannot go very wide on this one, which is very limited. It seeks to reduce by a proportion the Profits Tax on profits earned by certain companies exporting to certain countries.

Mr. Silverman: I leave the workers' part of the hon. Member's argument because quite clearly he did not intend to be taken seriously about that part of his argument at least.
Let us, then, turn to the other part of the hon. Member's argument, which is directly relevant to his Amendment. He is saying "Let us give an extra advantage to those who earn dividends—and who to some extent restrain themselves in the distribution of them—according to whether they happen to be producing for hard currency markets or not." I am now dealing with the Amendment itself and not with the hon. Member's alleged arguments in support of it. There are a great many people producing goods which are not for the dollar market. I suppose that it will still be necessary, in spite of our difficulties over the dollar deficit, to go on producing some goods for the home market. Otherwise, the hon. Member's incentive will not be very valuable. If we are to give people an incentive only to produce for hard currency export markets and are to send the whole of our products there, the incentive will be purely a paper one because those concerned will not be able to do anything with their reward. To make the incentive real one must be able to spend it on something.
One sector, or at any rate some modest proportion, of the industry of this country might still be allowed now and again to produce something for our own market or for other markets that are not dollar markets but which need our products just the same, products which will be some contribution towards the reconstruction of

the general economy of Western Europe. Or is the hon. Gentleman suggesting that they should be penalised, because his Amendment would penalise them? He is suggesting that we should provide an incentive for those who happen to be engaged in these industries at the expense of their colleagues, friends and competitors, and the hon. Member does that in the name of realism and incentive. He knows perfectly well that his argument is a tissue of ridiculous nonsense, and that is why he is so reluctant to answer any question addressed to him.

Mr. Spearman: I gather from your Ruling, Mr. Bowles, that it would be out of Order to attempt to answer the hon. Member's question as to how labour should be encouraged to move into the export trades. I shall content myself with one sentence by saying that on this side of the Committee, we would much prefer to do it by incentives than by the measure of direction that the Home Secretary appears to advocate.
The object of devaluation presumably is to encourage industry to expand in the export trade. The Chancellor must have realised the urgency of this, even though he did it rather late in the day, because obviously a very heavy price has to be paid. There is a general cut in the standard of living, in the social services and in pensions. Therefore, there must have been in the Chancellor's mind a very urgent need to encourage the export trade. He must have realised that it is not a question of traders altering labels and directing goods to America instead of to Europe. It means the undertaking of a considerable risk and a great re-organising of their businesses. At a time when, owing to the inflationary conditions created by the Government at home, it is so very easy to sell at home, there has to be an immense inducement to make it worth while to sell abroad.
In so far as the Chancellor brings in a tax on traders who export, to that extent he is quite clearly discouraging exporting. He is therefore taking away with his left hand what he has given with his right. That would seem to me to be a very clumsy and expensive way of doing it. Or is it, in fact, that he thought he had fixed devaluation too low and must counteract it by that clumsy method? There is no indication that


it is so, as the premium was 35 per cent. before devaluation and fell to 5 per cent. after, and is now back to 21 per cent.
The Chancellor has told us in his own words that the Government have rushed from one expedient to another and that as each series of expedients became exhausted a crisis has arisen. In this case the Chancellor seems to have gone rather further, and in a panic to be attempting to rush in two opposite directions at one time. If this is a bad tax, as I believe it to be, it ought at any rate to be much less bad if the Amendment of my hon. Friend is adopted, and if this discouragement to exporting is dropped from it. In fact, I suggest that if the Chancellor were a realist he would actually go further. He might even consider not taxing those companies which are doing well. It is the companies that are doing badly which need to be taxed, because in the present situation the Government have created conditions of abnormal profits in order to keep employment at full level until the General Election.

The Deputy-Chairman: The hon. Member must confine himself to arguments relating to this Amendment.

Mr. Spearman: I quite accept that I was going rather far; I became carried away with what might have been in Order on another occasion. I will content myself with urging that this bad tax, for reasons which have been amplified so well this afternoon by other speakers, should be modified, and the worst sting taken out of it, by accepting this Amendment and the encouragement of exports for which presumably the whole devaluation risk was undertaken.

Mr. Jay: The hon. Member for Monmouth (Mr. P. Thorneycroft) began by asking whether the Government thought that a firm which exported to the dollar market should get an advantage by so doing. The answer to that is that it certainly should, in our opinion, in this sense; it should be enabled to get a greater advantage by exporting to the dollar market than by exporting similar or corresponding goods to some other market.
Indeed, this suggestion before us today was originally put forward in this House by my hon. Friend the Member for

Bolton (Mr. J. Lewis) in the Debates on the Finance Bill in the summer. I thought that he put the case rather better than the hon. Member for Monmouth, because he left out the concentration camps and machine guns, which did not seem to me to improve the argument of the hon. Member for Monmouth. In reply to my hon. Friend the Member for Bolton in those Debates, I said that the Government would consider this suggestion very carefully. In the weeks that followed we did consider it carefully and thoroughly, and I should like to mention some of the formidable objections which can be raised against a proposal of this kind.
In the case of the actual Amendment, the hon. Member for Monmouth proposes that remission should be given for exports to hard currency areas. I think that, though it is a small point, he will agree that that definition could not be placed on the Statute Book in those words. But no doubt we could somehow get over that particular difficulty. The next obvious objection is that a remission of tax of this kind on the profits of a firm exporting to the dollar area would make a very large and totally unnecessary present to certain industries, such as the whisky industry, which, of course, is exporting to a very large extent to the dollar area already, and which could not export more, even if the remission were given. I think that perhaps that is an objection which might be faced, but it is obviously one of the difficulties.
The next difficulty is one which the hon. Member for Monmouth mentioned himself, namely, that of course the remission would be made in favour of the actual exporting firm. In many cases the actual exporting firm would not have had so much to do with the manufacture of the products as many other firms further down the line. The hon. Member for Edgbaston (Sir P. Bennett), who has just left the Chamber, has a great knowledge of a group of firms making motor-car components; and if this suggestion were introduced the whole of the remission of tax would be in favour of the motorcar assembly firm. I wonder whether the hon. Member for Edgbaston, and managements of other firms making components, would think it fair or reasonable that none of this remission should percolate through to them. Beyond that there is the further formidable difficulty, that


if this bounty were given to the shareholders, as it would be if the Amendment of the hon. Member for Monmouth were adopted, we should almost certainly find that the workers would argue that to a very large extent they produced the goods, but that the whole advantage accrued to the shareholders and none at all to the wage earners.
Though, therefore, there is much to be said for this proposal, there is a very great deal to be said against it. That is, of course, without mentioning at all the question whether it would be administratively practical in the simple tax collection sense. Therefore, we came to the conclusion at the time when the decision in favour of devaluation was taken that the case for this proposal was not conclusive enough to make it worth pursuing. I do not think that the hon. Member has realised that the incentive given by devaluation in many cases is far and away greater than any incentive given by the proposal which he puts forward. If, for instance, we take the case of an industry, of which whisky is usually mentioned as an example, which does not reduce its dollar price at all after devaluation, the export firms there, of course, enjoy a sterling price after devaluation which is 40 per cent. higher than it was before. Therefore, in that case, if the firm was previously selling the product, whatever it was, for £100, of which £5 represented profit, the price now goes up to £140 and, on the assumption that the sterling costs have not altered for the time at any rate, the profit goes up from £5 to £45. That is an increase in profit of 800 per cent.
6.30 p.m.
My hon. Friend the Member for Blackley (Mr. Diamond) explained on the Second Reading, with a lot of arithmetical eloquence, that the increase in tax amounted, as I think he proved, to 2¾ per cent. The fact of the matter is that the incentive arising out of devaluation is vastly greater than could be achieved by this sort of proposal. Indeed, if one takes, not the extreme case where the dollar price is not reduced, but what is probably the normal case where the price goes up, shall we say, from £100 to £120, whereas the profit before was £5 it now becomes £25. I think it is right to say that even there the increase in profit is one of 400 per cent.
The hon. Member was going very much astray, as indeed was the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) in the Second Reading Debate, when he suggested that the Government had not carried out their undertaking in the Washington communiqué to give incentives to exporters to the dollar area. Of course, as I said, that undertaking was carried out to a very considerable extent by the actual act of devaluation which was in the minds of those who signed the Washington communiqué, so that if the hon. Member really wishes to accuse the Chancellor of the Exchequer of double-dealing, or whatever he said, which is a ridiculous enough accusation to make at any time, there could be no more ridiculous peg on which to hang it than this charge that incentives, for dollar exporters are insufficient.

Mr. P. Thorneycroft: Why is the hon. Gentleman always so anxious to make suggestions that the Chancellor is being accused of deliberate dishonesty? The hon. Gentleman is always trying to drag this in. What I said was that I made no such imputation and shared it with no one, but that if he went on like this it was manifest that his words were bearing less and less relation to the actions taken afterwards.

Mr. Jay: I leave the matter to the Committee, but that seems to me to be a rather fine distinction.

Mr. Nigel Birch: The hon. Gentleman is not denying the fact.

Mr. Jay: There are two schools of thought at the moment. One school wishes to impose a heavy tax on special devaluation profits, which would wipe out the extra incentive altogether, and the other school wishes, by tax relief, to give an additional incentive on top of the incentive already given by devaluation. The Government take a middle view. In our opinion the proper action at this time is not to remove the incentive given by devaluation but, on the other hand, not to add a further incentive by way of tax relief.

Mr. David Eccles: I think that our friends in America are going to laugh once more at the Economic Secretary's statement. Fancy telling us that devaluation was considered by the Americans to be the sort of incentive


which the Government should offer to exporters to the North American market!

Mr. Jay: I must correct the hon. Gentleman. That was not quite what I said. I made two comments. The first was that, in the opinion of the Government, devaluation carried out that obligation, and the second was that the knowledge that devaluation was to come was in the minds of those who signed the Washington communiqué.

Mr. Eccles: I am asking what was in the minds of the Americans. It is clear that in their minds devaluation was not considered a special incentive to exporters to the North American market. What is the proof of that? Mr. Hoffman recently made a speech in Paris, which has gone all round the world, in which, long after devaluation, he called upon the Governments of the Marshall countries to give special incentives to press their goods into the North American market. It is clear that the Financial Secretary's explanation will make no sense at all in Washington. I agree with the spirit of what my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) has suggested in his Amendment, but I agree with the Financial Secretary that the Amendment itself certainly will not do.

Mr. Glenvil Hall: I have not spoken.

Mr. Eccles: I am sorry. I am referring to the Economic Secretary. I suggest that whoever drafted the Amendment had his tongue in his cheek, because it is clear that we could not press this bounty in this way without causing a vast number of injustices. However, we are left with the question, "What should we do by way of steering labour, materials, factory space and enterprise into the export market?" I do not draw any distinction, as my hon. Friend does in his Amendment, between the North American market and many other markets. We must increase our exports to all parts. It will not really do us very much good to divert exports from, say, India to North America, because all that will happen will be that the Indians will say that they require more dollars from the dollar pool, and we shall be in no better situation. We must increase our exports all round. We are in a position of full employment. Therefore, we must decide, if we do not adopt

this Amendment, what method shall be taken to divert our resources to the export trade. Is it to be by compulsion or not? If it is not to be by compulsion, it must be by some form of incentive. People will not go for purely patriotic reasons—

The Deputy-Chairman: The hon. Gentleman has certainly put the Chair, if not the Committee, in rather an awkward position at the moment. He has suggested that the hon. Member for Monmouth (Mr. P. Thorneycroft) drafted this Amendment with his tongue in his cheek. This Amendment was selected by the Chair because it was regarded as a serious suggestion. We cannot always tell, when we are considering these things, whether tongues are in cheeks of not. The hon. Gentleman can speak either for or against this Amendment. He cannot make some other alternative proposal on this Amendment.

Mr. Eccles: I am sorry that I used that phrase about the drafting of this Amendment. I am sure that it was very seriously meant, but it happens to be an Amendment which I submit is not practical, and the Economic Secretary agrees with me.
I still think that we ought to do what we can to improve the situation—by reducing taxation or by other methods—of those who are in the export trade. If this is not the right moment to answer the argument which was clearly put to me—my name was used by the hon. Member for Nelson and Colne (Mr. S. Silverman)—I will seek another opportunity to do so.

The Deputy-Chairman: I think the hon. Gentleman had better do that. I am quite certain that at the moment his speech is along the wrong lines.

Mr. Charles Williams: When I saw this Amendment on the Order Paper, I hoped that the Chancellor of the Exchequer would be here to deal with it. I realised the difficulties which the Financial Secretary, or whoever was put up to deal with the matter, would face. I think that I could have written the speech almost as well as the Treasury could have done it for them.
I agree that there are parts of this Amendment which I do not entirely support, but what I understand by it is


that it suggests a definite method whereby the hon. Member for Monmouth (Mr. P. Thorneycroft) desires to increase the amount of goods exported to hard currency countries. He has given a very clear and definite reason why that should take place, and the least the Government might have done with this suggestion was not to have given an ordinary answer of the sort that has been given, but to have said that the idea was fundamentally good and that they would look into it to see whether an alternative Amendment could be put down.
I want to know how I am to explain to my constituents the fact that the Chancellor tells the country of the necessity for every one of us to do all we can to increase dollar exports, and yet, when a practical suggestion is made, as in this Amendment, which might very well help to increase dollar exports, he rejects it. Surely, we might have expected, on an occasion like this and with an Amendment of this quality, that the Chancellor himself would have been here to explain the position to us. I am in very close touch with my constituents, and when they ask me why I do not ask the Chancellor questions about these matters, my answer is that he is never, or very rarely, in the House to answer anything. I do not wish to be personal, but I do say that when we have an Amendment of this sort—

Mr. S. Silverman: With its tongue in its cheek?

Mr. Collins: Will the hon. Gentleman inform his constituents that the Chancellor of the Exchequer, whom he says is not in the House very often, is here far more often than the Leader of the Opposition?

Mr. Williams: I have never yet heard—

The Deputy-Chairman: The hon. Gentleman must confine himself to this Amendment. He is entitled to make a protest, but he must not continue on those lines.

Mr. Williams: I quite accept that, and I will not continue the protest. I am sorry that the Government have not been able to take a different view about this matter, which is one that plainly concerns the small people, and not the monopolists. I am speaking for the small

people, and I express my grave disappointment at the attitude of the Government on this matter. The whole country will realise that the rejection of this Amendment merely indicates that the Government have no idea where they are going.

Mr. Walter Fletcher: The Economic Secretary to the Treasury, in his very careful reply to my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), refuted the purely political attack which was made by the hon. Member for Nelson and Colne (Mr. S. Silverman).

Mr. S. Silverman: Will the hon. Gentleman allow me? I agree that I made a political reply to what I thought was a political speech. I said nothing as hard about the hon. Member for Monmouth (Mr. P. Thorneycroft) as was said by his colleague, when he described the hon. Member as having drafted the Amendment with his tongue in his cheek.

Mr. Fletcher: I think that is a typical reply from the hon. Gentleman, showing that he really cannot bring himself to think in economic terms on an economic matter.
The Economic Secretary drew a picture of devaluation having produced fortuitous profits for a great many firms which are already in the export trade. The object of the Amendment, surely, is to increase the export drive by increasing the number of firms engaged in it. If we are to increase the volume and value of our exports, whether to the dollar area or not, we must have new people brought in, and in that case the argument which has been used from the Treasury Bench illustrating the case of whisky falls to the ground entirely.
It may be that it would be very difficult to carry out the proposal of the Amendment with every firm which is manufacturing for export partly to hard currency and partly to soft currency countries, but the idea behind it is perfectly correct. Yet, when we hear from the Economic Secretary that the Government are not going to adopt it, it seems to me to be almost a counsel of despair. If the Government are going to turn down every Amendment because it is in a form in which it would be difficult to work and they are to continue with that non pos-


sumus attitude, then they are not carrying out the exhortations of the Chancellor, the Prime Minister and everybody else.
I believe, therefore, that though this is possibly an impracticable scheme, we should have had something a little better than a refusal based on non-reality and a failure to realise that to get more exports we need to increase the number of exporting firms. I hope that we shall hear something a little more positive from the Treasury Bench.

6.45 p.m.

Lieut.-Commander Braithwaite: Whatever may be felt on the other side of the Committee about the drafting of this Amendment, I think we are much indebted to my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) for initiating a debate of very great importance. The Economic Secretary, in reply to it, paraded before us, as he was entitled to do, various objections to my hon. Friend's proposal, and he rested himself, I thought with comfort, upon the act of devaluation itself. I urge upon hon. Members opposite that the effect of devaluation is very short-lived. It is a shot in the arm, a drug, the effect of which will very rapidly wear off, and the Government must address themselves to measures of infinitely more permanent character than that.
May I remind the Committee that, when the Chancellor of the Exchequer announced the new value of the pound, he said that he had been criticised that the rate had been fixed perhaps unduly low but that he had fixed it at a level which could be comfortably held. Since then, it has slipped through the floor, so that this question of export is one that requires the greatest possible attention. Of course, it can be said that this Amendment contains a large number of anomalies, but so does the Profits Tax itself, and the Chancellor was the first to tell us that the Profits Tax produced what he described as rough justice. This Amendment has the same object, and I urge the Financial Secretary and his colleague not to be merely pedantic about it.
The Economic Secretary told us that there are two schools of thought on the matter and that the Government stand comfortably in the middle of the road. That will not do, for the urgency of this problem requires not two schools of

thought, but one school of action—and action taken before it is too late. Every day we see Government credit and the credit of the country fall. I urge the Government, since the Amendment is open to so many objections, to formulate some action that will stimulate exports to hard currency areas. I could give a number of illustrations, but I will not do so. I understand that in France they have a scheme—

The Deputy-Chairman: I think the hon. and gallant Gentleman is now doing what he said he was not going to do.

Lieut.-Commander Braithwaite: I was going to give an example—

The Deputy-Chairman: I am afraid not.

Lieut.-Commander Braithwaite: We have been asked by hon. Members opposite in your hearing, Mr. Bowles, to put forward practical suggestions.

The Deputy-Chairman: The hon. and gallant Gentleman cannot do that on this Amendment, which is obviously restricted. I think he realises that he cannot put forward these suggestions, as I have already reminded the hon. Member for Chippenham (Mr. Eccles).

Lieut.-Commander Braithwaite: It may be in Order a little later when we are discussing the Motion "That the Clause stand part of the Bill." I am sorry about that Ruling, Mr. Bowles, because I had wanted to make one comment on a remark of the hon. Member for Nelson and Colne (Mr. S. Silverman) about workers' participation; but as the workers are not included in this Amendment, I think I had better reserve my remarks on that matter also until we are discussing the Motion "That the Clause stand part of the Bill."

Amendment negatived.

Mr. Selwyn Lloyd: I beg to move, in page 2, line 48, at the end, to add:
(6) This section shall not apply when the profits arising in any chargeable accounting period from a trade or business computed in accordance with subsection (2) of section thirty-three of the Finance Act, 1947, are less than twelve thousand pounds.
After the two controversial Amendments which have been discussed, I think the Committee has now come into rather calmer waters. This is a very simple


and reasonable Amendment, and I hope it will receive support from all quarters of the Committee. The Committee will be aware that there is an abatement of Profits Tax for small businesses, and I am sure that hon. Members will remember the way in which that abatement is calculated by the formula given in the Finance Act, 1947. For example, if a company makes a profit of £5,000, that sum is deducted from the total of £12,000, leaving £7,000. The £7,000 is then divided by five, leaving £1,400, and that figure is the amount of the abatement, so that the company actually pays Profits Tax on the figure of £3,600. That principle has been accepted, and I think approved, on previous occasions from all quarters of the Committee.
On the occasion of the last Finance Bill, we on these benches sought to widen the scope of the abatement and to increase the total to £18,000, but we were then told—I think by the Financial Secretary—that the net cost of that proposal would be £3,500,000, and that it could not possibly be afforded. Today I am asking the Committee to accept this Amendment and to endorse that principle at a cost which, I suspect, would be very much less than the net figure of £3,500,000 which was put to the Committee on the previous occasion.
What are the reasons for exempting these small businesses from this increased rate of Profits Tax? I do not think that the hon. Member for Sowerby (Mr. Houghton) will be able to suggest that there will be any administrative difficulty over this because the principle is already accepted. In fact, it would be easy because there has to be a separate calculation for these companies. As regards purchasing power, acceptance of this Amendment would do no more than maintain the real value of the concession at the 1947 rate, because the pound has depreciated in that time to a greater extent than the concession.
But more important than those two preliminary points is the main principle which I wish to put to the Committee. It is the vital importance, particularly in this time of crisis, of supporting and sustaining small businesses. What are the reasons for this? I suggest that there are very sound economic reasons for the Committee taking special measures in the case of small businesses. First, the sup-

port of small businesses involves the diffusion of ownership. One of the troubles today is that in the Socialist conception of society we are getting these vast aggregations or concentrations of ownership, with the resulting feeling of remote control. I accept at once that private enterprise also, to a certain extent, has been guilty of the same thing. There have been these great aggregations of ownership which have become too big for any single collection of individuals to handle.
If one can maintain small businesses, it means that one is maintaining competition, guarding against monopoly and producing a state of affairs in which capital, management and labour are in close association one with another. That is a very sound situation, and it gives more and more people the feeling that they have a stake in the country. That is the first general principle which I would pray in aid of this Amendment.
Then there is the second matter, which is also of very great importance. We depend very largely on our small businesses for flexibility in the development of our industry. I admit at once that some technical developments are too big to be handled by small concerns. The control of atomic energy is probably a very good example of that. But in the past the great majority of our technical progress will be found to have been made by the small concerns, and the big businesses of the future will again grow from small beginnings. If that is to happen, it must involve a small man taking big risks, and to do that he must have every possible incentive.
The third reason why support should be given to the small businesses is that they can be of very real assistance to the export drive. My hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) talked about people thinking they could switch exports from one market to another merely by altering the label. Others think that we could have a National Export Corporation switching exports by compulsion. People who think that are very much mistaken. The export drive, particularly in the hard currency areas, will depend very much on the personality of the exporter. Although the phrase is a very old one, I think that we do want the merchant adventurer. The buyer, particularly in a market like


the American or Canadian markets, must feel that he is going to get the personal and individual attention of some salesman.
A very good example of that is the relation which existed under the old arrangements between the grower and the spinner of cotton. There were 150 firms on the Liverpool cotton market before the war, simply because they were able to give individual attention to the requirements of individual spinners. That is why so many firms remained in existence on that market. Exactly the same thing is going to be of importance in the export drive. The buyers have got to feel that they will get individual treatment from those who seek to sell them goods. I have in mind one firm which contributes substantially to our dollar earnings, where three generations of the same family have been carrying on a business in goods of a very special quality. I know that they get a good deal of their business because of the personal association of the family with those to whom they have been selling their goods. That is a relationship which is of tremendous importance when trying to get into the American market.
Those are three reasons why I think we should support and sustain the small business. There is the further factor which bears a little on part of our previous discussion that in the case of small companies the link between distributed profits and the efforts made by capital, management and labour is very much greater than in the case of a large company. In the case of the small firm, the proposal that, say, £30,000 should be risked on some new venture has a much more direct and personal effect on the shareholders than would possibly be the case in a larger concern. The share-holders know that if things go wrong it means that their dividends for years ahead are at stake. Where there is that direct personal link between distributed profits and the amount of effort put in both by those who own the capital and those who manage the concern, the amount of the distributed profits is of great importance to the efficiency of the business.
7.0 p.m.
To give an example, I had put in my hand a few minutes ago particulars of a

family business in the City of London. I quote:
Our family business is that of merchant tailors, which has been carried on in the City of London for over 80 years. Except for my elder brother, now retired, the shareholders are all directors; they are myself and my three nephews. We all work full time, are skilled in our craft, and perform the duties of selling, cutting and fitting, so that all the work of a managerial nature is carried out by us. The normal salary which our company would have to pay in this class of business to an employee with corresponding qualities and experience would be about £1,200 a year and—if this work was not done by the directors—our salaries bill would be at least £5,000 a year more than it is, and this £5,000 would be allowed as an expense for Profits Tax purposes. Because the work is done by the directors we can only charge £2,500 a year. This allows £625 a year for each director, and we have to pay Profits Tax on any remuneration paid to them in excess of this amount.
That is an example which bears out my point in the case of the small business.

Mr. Diamond: rose—

Mr. Selwyn Lloyd: I have almost finished and if the hon. Member wishes to intervene perhaps he would wait.

Mr. Diamond: Perhaps the hon. and learned Gentleman will permit me to interrupt because he is always so accurate and what he says is always worth listening to. I must draw attention to the fact that he is not quite correct. Perhaps he will be good enough to tell the House that it is quite incorrect that only £625 is allowed to each director. There is the abatement which arises here.

Mr. Selwyn Lloyd: I quite agree with the hon. Member that in this letter there arises the other principle of the director-owned company for which there is rather special treatment. I also concede that if the profits of this concern are less than £12,000, they will be given the abatement. I am not putting this forward as a specific case dealing with the point I was making; I used it as an illustration of a case where the directors of a small company, the management of a small company, are also the shareholders and where there is that direct link between the distributed profits and the remuneration of those who are managing the concern. That was the reason I mentioned this letter, and I agree that there is the other aspect of this example to which the hon. Member for Blackley (Mr. Diamond) referred.
If I may sum up, we maintain that at this time there are special reasons for trying to assist and support these small businesses. I am told that the other day, referring to the present crisis, the Lord President of the Council used the phrase, "If we are to live at all" we must do so and so. That is a pretty serious statement and it comes, very ill from the mouths of hon. Members opposite when they state that we on these benches are the people who are always dismal and gloomy about the future. That was an expression of the Lord President of the Council and, if I may quote his words, if we are to live at all economically in these difficult days, I cannot conceive anything more foolish or more shortsighted than to place an additional burden upon the efforts of small businesses and small concerns. I therefore hope that the Committee will accept this very reasonable Amendment.

Sir William Darling: The appeal made by my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) was frankly an appeal for preference. He is asking the Committee to give something to a particular class of person, a particular group of industrialists, and we have to make our case for this highly preferential treatment. I think the case which can best be made is on the quality of the types of business which we have named and the work expected from them. First of all, as to quality. They are small businesses, individually and personally managed, they have admirable labour relations, in the main, and the employees are called by their Christian names while, behind his back, the employer is called by his Christian name. The relations are of a very happy and domestic character.
These businesses, depending on their character, employ from 20 to 200 or 300 persons and they form a very valuable part of our economy. In many cases these businesses are not in large centres of industry. They are in small towns where, because of the development of the industry, a family business has grown up from one generation to another. They are a very important aspect of the life of many of the small communities. They may not be engaged in the main engineering centres or the main textile centres, for often they are in relatively remote

places. These businesses have continued because of the devotion of families, in many instances, to family businesses. These people have resisted the temptation to go into large-scale businesses because they like the business in their own craft, and that is an admirable feature in our economy. It is a strengthening factor in our economic arrangements. It is for that class of person that I particularly appeal, and it is to that class that this Amendment applies.
The second aspect of this enterprise is that the Government of the day—and in fact, more than the Government of the day, the country—demand persons who will enter the markets of the world, particularly the American markets, and sell the goods which they manufacture. The people to do that are not the highly-paid salesmen representing the great companies, because they have rarely the individuality and personality which commands the attention of the American and Canadian buyer. If a man goes to the United States and says, "I represent the A.B.C. Electricity Company, Ltd.," his chances of making an entry into the buyers' parlour are remote, but if he says, "I represent John Smith and Company, established in X for the last 300 years, and I am John Smith, the Sixth," then such a person will find his way right past the management into the buyers' parlour and will get a very good welcome.
I ask the Government to consider who are the people we want to encourage to enter these markets? Who are the merchant adventurers to whom the President of the Board of Trade so eloquently appealed? They are not the salaried employees of the great concerns; they are the men who are soaked and steeped in their businesses and are passionately devoted to them. They want encouragement, but they are discouraged. The penal taxation of the last 25 years, especially following the death or retirement of partners, has been a weakening factor in such businesses and they are not now well equipped for these new economic trials upon which they are engaged. Their temptation is to hold up their hands and say, "This Government is ruining the country; I will take a little more sleep, and I will retire. The country has gone to the dogs." The temptation is for them to devote their concluding years to a pessimistic rumination on the Britain


that once was. That is the tendency and I regret to say that, despite the moral exhortations of the Lord President of the Council and others, none of which is adequate, numbers of these people in these days are tending to say, "Well, it has lasted my time and I am going to give up the unequal struggle."
I suggest that we should put some vigour and encouragement into these persons. We should say to them, "The struggle does avail and it is worth while to fight the battle." We can send them forth into the markets of the world with, at any rate a secure economic background, at any rate the right to retain a reasonable proportion of the profits which they so precariously earn. It is not easy for a firm which has never done any overseas trade to find a way across the Atlantic in these difficult and unexpected circumstances, and to sell. I doubt if there is anyone in this House who has attempted to sell in New York or Detroit or New Orleans or Vancouver or Toronto, and who knows the procedure. It is not as simple as fighting an election or as making a speech in this House or as selling to the home trade.
The difficulties of selling to the American and Canadian public cannot be overestimated. We are entering into a market which is the fullest and richest in the world. Has anyone ever looked at an American critically, and said, 'What can I sell you? Can I sell you a hat?" He says he has one already. It is a Stetson, which is as good as a Christy. He says he does not know a better. Can you sell him a shirt? He says he has one and he names one—an "Arrow." He says you cannot give him a better. A suit? Or shoes or a watch and chain or a fountain pen or a scarf? What can you sell him? That is the task which the British merchant adventurer has to undertake. I want to tell hon. and right hon. Members who have had no experience of selling, even in this country—in which they have been singularly unsuccessful—that the salesmanship needed is not easy, especially when we are selling to someone who has all he wants and all he thinks he needs. And so it seems to me that we must select very carefully, and give every encouragement to, the men and women who are to undertake this task. They are the men and women referred to in this Amendment.
They are not engaged in large scale businesses. There is, for instance, the knitwear business. The Board of Trade would tell any one of us that the produce of that trade is not sold by great companies but by individuals who stamp the goods they make with their own names. The produce of the leather trade is not made by vast companies in thousands or millions of articles, but by comparatively small individual companies specialising in various sorts of goods. The linen trade is conducted by small firms, not by large combines, and the individual firms are the ones to make an entry into the dollar markets of the United States and Canada. Another instance is that of the Scotch tweed trade, which I know so well. Every piece, every yard of material is sold, not by multiple companies or groups of large companies or monopolists, but by men who make those tweeds themselves, whose fathers made them before them, and whose grandfathers did so, too. A man in that trade knows by the feel of the cloth the person who handled the loom. Then there is the book trade. All these special trades, these British luxury trades, are not and probably could not be conducted as large scale industry. These goods must be the output of comparatively small firms with small capital, and relying on individuality and personality.
This Amendment is a suggestion that, if we are to capture that dollar market, we cannot send over tanks, but must send over light artillery and light cavalry, and the real adventurers of commerce, not the salesmen with large expenses books representing large companies and reputations, the million pound companies. Those men are not the people to get into that market, but the small men, to whom my hon. and learned Friend referred.
A further difficulty the small firms labour under, which this Amendment, if carried, would, to some extent, alleviate, is this. The Financial Secretary to the Treasury is here, and will be aware that the banks have been instructed recently by his right hon. and learned Friend to limit the amount of loans which are to be made available to industry. These small firms will not be able to get the additional capital which may be necessary even from the banks nowadays, and so they will be driven back to the only resources left to them—the right to obtain a larger measure of the profits which they


have honestly earned in a field in which the Government desire them to be earned.
Frankly, I am making an appeal for a special class. I am making an appeal for a group of persons who are irreplaceable, whose numbers are probably declining, but who are, in this grave, anxious moment in our national affairs, the very essence of our existence, and the people who will break the backbone of the sales resistance of the United States and Canada. Have the Government no encouragement for those soldiers? When soldiers went up the line in war, when the infantry went up the line, they got some advantages over the rest of the troops. The men who stayed in the dugouts, as some sometimes had to, or who remained at the base, did not expect to be fed quite so heartily and so well as those who entered the firing line. Is there not a drop of rum for the fighting troops?

Mr. Chamberlain: Or whisky?

Sir W. Darling: This Amendment proposes to give it, and I hope that the right hon. Gentleman will give it consideration and support.

Mr. Glenvil Hall: I hope we can dispose of this Amendment fairly easily, because the point raised by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) is quite a simple one, and, I think, a single one. The present position is that all profits of a company, whose profits for the year are not more than £2,000, are exempt from Profits Tax. That is, any company which does not make a profit of more than £2,000 does not pay Profits Tax at all. A company which makes a profit of between £2,000 and £12,000 pays the tax at a lower rate. It has a certain abatement dependent on its franked investment income and on its ordinary profits. What the hon. and learned Gentleman wants, as I understand his Amendment, is that those companies that do not make as much profit as £12,000 should not be subject to the incidence of the extra five per cent. which we are now discussing.
7.15 p.m.
He bases his plea on the fact that they are small companies, and, because they are small companies, ought to be entitled to consideration. I want to put it to the Committee that they are already

getting it, in that they do pay at a lower rate if their profits do not amount to £12,000. I feel, that being so, when one remembers the reasons why this proposal was made, that it would be grossly unfair to the great body of taxpayers if we acceded to the hon. and learned Gentleman's request.
Let me remind the Committee once more that the main reason why my right hon. and learned Friend has imposed this extra 5 per cent. is that other sections of the community are likely, because the cost of living is to rise, to be penalised to a certain extent by paying more, certainly for their bread. That is to say, the lower paid citizens of this country, because of devaluation and the increase of 1d. on the price of the loaf, will find, to that extent, that the cost of living will be more than it was. We see no reason, and I am positive that the Committee in all quarters will see that there is no reason, why, if we are not doing anything for those people, we should do something, in addition to what is already being done, for those companies whose profits do not reach £12,000.
Now, the hon. Gentleman the Member for South Edinburgh (Sir W. Darling) said that many of these people could not now get advances from the banks because my right hon. and learned Friend had suggested to the banks that they should be rather cautious about making, advances to industry during the next months—or whatever the period may be—and that, therefore, those particular companies needing money would find that their banks would not be as accommodating as they previously were. He said they would be driven back to the right to retain their additional profits, and he put that forward as a plea for our support for this Amendment. In other words, his suggestion is that, as they want extra capital and they cannot get it from the banks, they ought to be allowed to retain the additional profits which they will make because of devaluation.
Well, we are not stopping their retaining them. In fact, we are inviting them to keep those profits. It is only if they distribute the profits that this extra charge falls on them, and it is because we do not want them to distribute those profits, and so increase the amount of money in circulation at this particular time, that the Profits Tax is being


increased. Therefore, we are acceding to the request of the hon. Gentleman the Member for Edinburgh—is it North or East?

Sir W. Darling: rose—

Mr. Glenvil Hall: The hon. Gentleman the Member for Edinburgh, South, has such an all embracing and aggressive personality that one thinks of him as representing the whole of Edinburgh.

Sir W. Darling: The right hon. Gentleman's knowledge of my constituency is as vague and inaccurate as is his argument.

Mr. R. A. Butler: The argument has gone west.

Mr. Glenvil Hall: I have very little to add to what I have already said. This is a simple proposition, and there is a simple answer to it. We ought not to do, for those in the position described by the hon. and learned Member for Wirral, what we are not prepared to do for the greater body of poor people, who will find they have to pay more for their bread during the coming weeks. If the suggestion is that we ought to do this to help them, then the answer is that they can easily help themselves by not distributing those profits. We are not taking the profits from them. We are asking them to keep them. If they keep them nobody will be better pleased than my right hon. and learned Friend.

Mr. R. A. Butler: I should like to make clear that we on this side propose to carry this matter to a Division. We feel that the Amendment moved by my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has very much to commend it. I am afraid I could not follow the argument of the Financial Secretary when he was talking about doing this or that for somebody or other. What he is doing is imposing an extra penal tax, and we on this side of the Committee do not regard that as doing anything for them, except in the rather obnoxious sense of "doing them in." If that is what the right hon. Gentleman means, then we can understand his use of the English word "do."
We find it very difficult to understand the argument of the Financial Secretary that these people in small businesses who make profits between £2,000 and £12,000

are obtaining a preference, and are, therefore, very satisfactorily situated. That is exactly the same argument as he tried to make when he told us not to be sorry for the exporters to hard currency countries when they had this new tax imposed upon them because they could look with satisfaction on the fact that they were now being taxed the same as all other profit makers. Those arguments are futile.
In either case, he is imposing extra taxation of a penal character on people whom the Government ought to be encouraging at the present time. There is no one who ought to be encouraged more than the small business man. The Chancellor of the Exchequer when he imposed this tax—and the real reason was given on 27th September and in the later Debate when this penal taxation was promoted to "cuts" level—said, in the original Debate, that it was put on because certain people would make extra profits and, on the whole, would benefit by the change, especially in the case of exports. It was put on as a penal taxation on exporters to hard currency markets, and it is no good the Government now trying to make out that it has some social significance.
We are convinced that many of these small businesses are doing useful work by helping the drive for exports in hard currency areas. I have in mind handicrafts, on which the right hon. Gentleman's chief is particularly keen, and which should be encouraged at the present time, and with which I myself am associated in a variety of capacities. Handicraft industries are very small industies. Some would come under the £2,000 level and would not be affected, but others would fall within the range. I think it is very discouraging to the small types of business and industry at the present time to have this extra taxation imposed, when they ought to be encouraged to do their best for the national economy.
What is more important is the vast range of these small businesses which will not be making extra profits at all, and which will find themselves obliged, in the case of any equity shareholders they may have, to pay out to those shareholders the proportion which they are in the habit of doing. These people are going to be hit by this tax, and we


think they ought to be relieved. The Chancellor of the Exchequer said that this tax involved rough justice. We are attempting in this Amendment to introduce a small degree of justice for the small business.

Mr. W. Fletcher: I support this Amendment on much the same grounds as the hon. Member for South Edinburgh (Sir W. Darling). I also have been engaged in selling goods in America as a "drummer." I was surprised that the Financial Secretary revived the argument used last week by the hon. Member for Sowerby (Mr. Houghton) that the real object of this tax is to placate the workers. It is time that we dropped that argument, because it does not carry well in the House and even less well in the country.

Mr. Glenvil Hall: I do not think that I used the word "placate." I move about among the workers a fair amount, and they do not want placating; they want justice. All this talk of placating and incentives is coming from the other side.

Mr. Fletcher: I think that when the right hon. Gentleman looks at HANSARD he will see that I am quoting the hon. Member for Sowerby very accurately. They want justice, but they do not want that dog-in-the-manger form of justice which consists in saying, "Because I have been hurt, I want to see the other fellow hurt." That is a very bad psychological approach which is very common on the benches opposite.
Let us get back to the small firm and to what will be the effect of this Amendment. Anyone who has tried to sell goods in America knows perfectly well that the greatest appeal to the Americans, who live in a land of mass production, is individuality. All the mass producers of America try to sell their goods as if they were small individual productions. I hope that the Financial Secretary will believe me when I say that there is a much greater pool of dollars to be collected in America by encouraging the small exporter here than he imagines. The small exporter cannot make use of the Export Credits Department because it too complicated and does not fit in very well. Therefore, it is important that he should receive some encouragement such as that put forward in this Amendment.
It is also important that goods from this country should not always come from

London, Liverpool, Manchester, or any of the other great cities. The Americans follow British history and geography very closely and they like something which is not a mass product of Britain coming from a big centre but which has a tang of the countryside and comes from a small locality of which they know. That has a great sales appeal. I think that it is a great mistake to underrate the importance of aggregating the dollars that will be collected by helping the small people who are distributed over the whole of Great Britain, Scotland and Wales. I hope that a little more consideration will be given to those people, not only because I do not think it will cost very much—we have not been told what the cost will be—but because it will be a notable sign of encouragement which will cash in very well.

Mr. C. Williams: I think that the Financial Secretary might tell us what the cost will be. Am I right in saying about £1 million?

Mr. Glenvil Hall: The gross amount is about £2¼ million and the net amount is £1¼ million. I am sorry that I did not give the figures in my speech.

Mr. Williams: I am obliged to the right hon. Gentleman, and my reason for asking was to bring out how very small is this amount. My other object is to put forward a case on behalf of an entirely different section of the community. In my Division, in Plymouth and many other places a great number of comparatively small businesses were bombed or destroyed in the war. They have at last by means of licences, got their businesses going again. Many of them have had many years without any distribution of profits, and we want to give them a change in the way of distribution of profits. It is all very well for the Financial Secretary to say that the absence of any profits, practically, for five or six years is a good reason why they should put some profits back. These small people want something to live on and they have often a comparatively large number of shareholders That is why I am glad this Amendment has been proposed by our party, because in the many areas which I have mentioned these people will he hit by this tax.
What about the re-developed hotels, which are in exactly the same position,


and which have been hit by various rules and restrictions? They are just beginning to become real dollar earners today. I will say nothing more except to state this one simple fact: when I saw this Amendment, knowing that it affected small men and small business people of no great distinction—of great distinction and character so far as output of goods is concerned, but not the type of people who are able to influence the Government—I knew that the first thing the Government would do would be to turn it down, because the one thing which they hate above everything else is the small business man who is free and independent.

7.30 p.m.

Sir Peter Bennett: I would not intervene were it not that I represent the city of a thousand trades. A little while ago I spoke on behalf of the larger industries, and I feel that I must speak in support of this Amendment which is designed to help the smaller industries of my constituency. Last night I was at a meeting of businessmen, urging small manufacturers to make efforts to go overseas to attempt to sell their goods. I can assure the Committee that many of them would like to go, but they are frightened and worried. The hon. Member for Bury (Mr. W. Fletcher) knows that going round America or Canada as a stranger is a worrying job; we are trying to persuade them to do it, but they are thinking of all the trouble, risk and difficulty. The reason we support this Amendment is so that we can show these men that they are getting encouragement in taking these risks and sympathy in making the effort.
I have heard the speeches of the Financial Secretary and others, but, like my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler), I am reminded of the old gag that repartee is what one thinks of on the way home. We heard the Chancellor of the Exchequer, and in his speech there was no suggestion that this was an equalising measure to try to equal out the sacrifice. It was quite clear that the Chancellor thought there would be some people who would get additional profit; he did not know how to put his hand on it, and in order to get it he included everybody.

That is the impression that I and others received. There was no suggestion that it was because everybody had to bear an equal share of any sacrifice. The Chancellor thought that extra profit would be earned and that he ought to tax it; he did not know how to do it, so he said. "We will tax the lot."

Mr. Diamond: The hon. Gentleman told us of a meeting which actually took place, which of course interests us a great deal more than theoretical arguments. I understand it was a meeting at which he was encouraging small traders to export, and they were telling him that it was difficult, which we all appreciate. Would he mind telling us as a matter of fact how many of those would-be exporters said: "The reason why we are not prepared to export in our country's hour of need is because of the possible 2¾ per cent. additional tax on such profits as we may distribute"?

Sir P. Bennett: The hon. Gentleman is very good at setting up ninepins of his own and knocking them down. He knows perfectly well that that sort of thing would not be said. These men were not chartered accountants but ordinary businessmen concerned about taking risks. We were not going into this sort of details, but merely trying to persuade them to go overseas, and they were telling us the difficulties.
My point is that this was the opportunity for which the Chancellor said he was looking; he wanted to catch the people who were going to make profits, and he is taking the lot because he does not know how to get those who are making the extra profit and leave the others out. We are trying to get these small traders to take additional risks, and this gesture for which we ask would be much appreciated. The hon. Member for Blackley (Mr. Diamond) knows that in working out these things this sort of businessman does not take a slide rule, but rather takes a general view and considers, "Shall I? Shan't I?" What we ask for is the sort of thing that may sway him; it is a little bit of encouragement which may persuade him to do what we want. If this Amendment is accepted, we can go to these businessmen and say. "The Government want you to carry on; they are doing what they can, and they appreciate that you are taking risks." This gesture would be a help in persuading


these people who are at present doubtful whether they ought to do this.

Mr. Houghton: There ought to be a little more common sense and not quite so much sentiment in this discussion, because hon. Members opposite are working upon their own emotions and playing upon ours. We have heard of the family business, and have had painted for us the romantic picture of old ladies sitting about doing their crochet work while their merchant adventurer sons carry on the family tradition, and how they want the encouragement and incentive which exemption from additional Profits Tax would give to small businesses. It must be remembered that the Amendment amounts to exempting small businesses making less than £12,000 profit a year from four-fifths of 5 per cent. additional Profits Tax—less than 1s. in the £1 on distributed profits. I must again emphasise that on undistributed profits there is no additional impost; it is only on distributed profits that this small increase is asked for.
I ask those who press this Amendment to consider whether the disturbance of the equilibrium of the present tax structure is justified by the incentive which this additional abatement would give. The Chancellor has made a pro-

posal which is quite simple in its purpose and effect: that of maintaining the existing structure of the tax, with its existing abatements, reliefs and special provisions, and merely increasing the Profits Tax by 5 per cent. on distributed profits.

I suggest in all seriousness that if we tamper with the abatements and reliefs, especially on the ground that the value of money has fallen, then, as the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) suggested, we shall get into very deep water. On his argument we are entitled to increase all the Income Tax allowances and abatements on the ground that the value of the £ has fallen since they were fixed at their present level, and any disturbance of present Profits Tax arrangements obviously opens up opportunities for additional relief claims and special consideration on the incidence of the increased tax. It is far better to accept the proposal of my right hon. and learned Friend to confine this Bill and what we are doing in it to the simple proposition of increasing the tax on distributed profits by the almost derisory sum of 1s. in the £.

Question put, "That those words be there added."

The Committee divided: Ayes, 97; Noes, 270.

Division No. 276.]
AYES
[7.40 p.m.


Amory, D. Heathcoat
Granville, E. (Eye)
Prior-Palmer, Brig. O.


Baldwin, A. E.
Hare, Hon. J. H. (Woodbridge)
Raikes, H. V.


Barlow, Sir J.
Harris, H. Wilson (Cambridge Univ.)
Reed, Sir S. (Aylesbury)


Bennett, Sir P.
Harvey, Air-Comdre. A. V.
Roberts, H. (Handsworth)


Boles, Lt.-Col. D. C. (Wells)
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Roberts, P. G. (Ecclesall)


Bowen, R.
Hogg, Hon. Q.
Robinson, Roland (Blackpool, S.)


Braithwaite, Lt.-Cmdr. J. G.
Hollis, M. C.
Ropner, Col. L.


Bromley-Davenport, Lt.-Col. W.
Hurd, A.
Sanderson, Sir F.


Buchan-Hepburn, P. G. T.
Joynson-Hicks, Hon. L. W.
Savory, Prof. D. L.


Bullock, Capt. M.
Lambert, Hon. G.
Scott, Lord W.


Butcher, H. W.
Legge-Bourke, Maj. E. A. H.
Stewart, J. Henderson (Fife, E.)


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Lennox-Boyd, A. T.
Stoddart-Scott, Col. M.


Byers, Frank
Lindsay, M. (Solihull)
Strauss, Henry (English Universities)


Channon, H.
Linstead, H. N.
Teeling, William


Clarke, Col. R. S.
Lloyd, Selwyn (Wirral)
Thorneycroft, G. E. P. (Monmouth)


Conant, Maj. R. J. E.
Low, A. R. W.
Thorp, Brigadier R. A. F.


Corbett, Lieut.-Col. U. (Ludlow)
McFarlane, C. S.
Touche, G. C.


Crookshank, Capt. Rt. Hon. H. F. C.
Mackeson, Brig. H. R.
Turton, R. H.


Crosthwaite-Eyre, Col. O. E.
Maclay, Hon. J. S.
Tweedsmuir, Lady


Darling, Sir W. Y.
Maclean, F. H. R. (Lancaster)
Vane, W. M. F.


Davidson, Viscountess
Macmillan, Rt. Hon. Harold (Bromley)
Wadsworth, G.


Digby, S. Wingfield
Maitland, Comdr. J. W.
Wakefield, Sir W. W.


Dodds-Parker, A. D.
Manningham-Buller, R. E.
Walker-Smith, D.


Dower, Col. A. V. G. (Penrith)
Marshall, D. (Bodmin)
Ward, Hon. G. R.


Dower, E. L. G. (Caithness)
Mellor, Sir J.
Williams, C. (Torquay)


Drewe, C.
Molson, A. H. E.
Williams, Gerald (Tonbridge)


Elliot, Lieut.-Col. Rt. Hon. Walter
Morrison, Maj. J. G. (Salisbury)
Willoughby de Eresby, Lord


Erroll, F. J.
Mott-Radclyffe, C. E.
York, C.


Fletcher, W. (Bury)
Nicholson, G.
Young, Sir A. S. L. (Partick)


Foster, J. G. (Northwich)
Nield, B. (Chester)



Fox, Sir G.
Odey, G. W.
TELLERS FOR THE AYES:


Fraser, Sir I. (Lonsdale)
Orr-Ewing, I. L.
Mr. Studholme and


Gage, C.
Pickthorn, K.
Colonel Wheatley.


Gomme-Duncan, Col. A.
Prescott, Stanley





NOES


Acland, Sir Richard
Gilzean, A.
Morris, P. (Swansea, W.)


Adams, Richard (Balham)
Glanville, J. E. (Consett)
Morrison, Rt. Hon. H. (Lewisham, E.)


Allen, A. C. (Bosworth)
Gooch, E. G.
Murray, J. D.


Allen, scholefield (Crewe)
Gordon-Walker, P. C.
Nally, W.


Anderson, A. (Motherwell)
Grenfell, D. R.
Naylor, T. E.


Attewell, H. C.
Grey, C. F.
Neal, H. (Claycross)


Austin, H. Lewis
Grierson, E.
Nicholls, H. R. (Stratford)


Awbery, S. S.
Griffiths, D. (Rother Valley)
Noel-Baker, Capt. F. E. (Brentford)


Ayles, W. H.
Griffiths, Rt. Hon. J. (Llanelly)
Noel-Buxton, Lady


Ayrton Gould, Mrs. B.
Griffiths, W. D. (Moss Side)
O'Brien, T.


Balfour, A.
Gunter, R. J.
Oldfield, W. H.


Barstow, P. G.
Guy, W. H.
Oliver, G. H.


Barton, C.
Haire, John E. (Wycombe)
Paling, Will T. (Dewsbury)


Battley, J. R.
Hale, Leslie
Palmer, A. M. F.


Bechervaise, A. E.
Hall, Rt. Hon. Glenvil
Pannell, T. C.


Benson, G.
Hamilton, Lieut.-Col. R.
Pargiter, G. A.


Berry, H.
Hannan, W. (Maryhill)
Parker, J.


Beswick, F.
Hardy, E. A.
Paton, Mrs. F. (Rushcliffe)


Bevan, Rt. Hon. A. (Ebbw Vale)
Hastings, Dr. Somerville
Pearson, A.


Blenkinsop, A.
Haworth J.
Peart, T. F.


Blyton, W. R.
Henderson, Rt. Hon. A. (Kingswinford)
Piratin, P.


Boardman, H.
Henderson, Joseph (Ardwick)
Platts-Mills, J. F. F.


Bottomley, A. G.
Herbison, Miss M.
Poole, Cecil (Lichfield)


Bowden, H. W.
Hobson, C. R.
Porter, E. (Warrington)


Braddock, Mrs. E. M. (L'pl. Exch'ge)
Holman, P.
Porter, G. (Leeds)


Braddock, T. (Mitcham)
Holmes, H. E. (Hemsworth)
Price, M. Philips


Bramall, E. A.
Horabin, T. L.
Pritt, D. N.


Brook, D. (Halifax)
Houghton, Douglas
Proctor, W. T.


Broughton, Dr. A. D. D.
Hoy, J.
Pryde, D. J.


Brown, T. J. (Ince)
Hubbard, T.
Ranger, J.


Burden, T. W.
Hudson, J. H. (Ealing, W.)
Rankin, J.


Burke, W. A.
Hughes, Emrys (S. Ayr)
Reeves, J.


Callaghan, James
Hughes, H. D. (W'lverh'pton, W.)
Reid, T. (Swindon)


Chamberlain, R. A.
Hutchinson, H. L. (Rusholme)
Rhodes, H.


Champion, A. J.
Hynd, J. B. (Attercliffe)
Richards, R.


Chetwynd, G. R.
Jay, D. P. T.
Roberts, Goronwy (Caernarvonshire)


Cluse, W. S.
Jeger, G. (Winchester)
Robertson, J. J. (Berwick)


Cobb, F. A.
Jeger, Dr. S. W. (St. Pancras, S. E.)
Robinson, Kenneth (St. Pancras, N.)


Cocks, F. S.
Jenkins, R. H.
Rogers, G. H. R.


Coldrick, W.
John, W.
Ross, William (Kilmarnock)


Collick, P.
Johnston, Douglas
Scollan, T.


Collins, V. J.
Jones, Rt. Hon. A. C. (Shipley)
Scott-Elliot, W.


Colman, Miss G. M.
Jones, D. T. (Hartlepool)
Segal, Dr. S.


Cook, T. F.
Kenyon, C.
Shackleton, E. A. A.


Cooper, G.
Key, Rt. Hon. C. W.
Sharp, Granville


Corbet, Mrs. F. K. (Camb'well, N. W.)
King, E. M.
Silverman, J. (Erdington)


Corlett, Dr. J.
Kinghorn, Sqn.-Ldr. E.
Silverman, S. S. (Nelson)


Cove, W. G.
Kinley, J.
Simmons, C. J.


Crossman, R. H. S.
Kirkwood, Rt. Hon. D.
Skinnard, F. W.


Cullen, Mrs.
Lang, G.
Smith, C. (Colchester)


Daines, P.
Lavers, S.
Smith, Ellis (Stoke)


Dalton, Rt. Hon. H.
Lee, Miss J. (Cannock)
Smith, H. N. (Nottingham, S.)


Davies, Edward (Burslem)
Leonard, W.
Smith, S. H. (Hull, S. W.)


Davies, Ernest (Enfield)
Leslie, J. R.
Snow, J. W.


Davies, Harold (Leek)
Lewis, A. W. J. (Upton)
Solley, L. J.


Davies, Haydn (St Pancras, S. W.)
Lewis, T. (Southampton)
Sorensen, R. W.


Davies, R. J. (Westhoughton)
Longden, F.
Sparks, J. A.


Davies, S. O. (Merthyr)
Lyne, A. W.
Steele, T.


Deer, G.
McAdam, W.
Stewart, Michael (Fulham, E.)


Delargy, H. J.
McAllister, G.
Stokes, R. R.


Diamond, J.
McGhee, H. G.
Summerskill, Rt. Hon. Edith


Dobbie, W.
McGovern, J.
Swingler, S.


Dodds, N. N.
Mack, J. D.
Sylvester, G. O.


Driberg, T. E. N.
McKay, J. (Wallsend)
Symonds, A. L.


Dugdale, J. (W. Bromwich)
McKinlay, A. S.
Taylor, H. B. (Mansfield)


Dye, S.
Maclean, N. (Govan)
Taylor, R. J. (Morpeth)


Ede, Rt. Hon. J. C.
McLeavy, F.
Taylor, Dr. S. (Barnet)


Edwards, Rt. Hon. Sir C. (Bedwellty)
MacPherson, Malcolm (Stirling)
Thomas, D. E. (Aberdare)


Evans, E. (Lowestoft)
Macpherson, T. (Romford)
Thomas, Ivor Owen (Wrekin)


Evans, John (Ogmore)
Mallalieu, E. L. (Brigg)
Thomas, John R. (Dover)


Evans, S. N. (Wednesbury)
Mallalieu, J. P. W. (Huddersfield)
Thorneycroft, Harry (Clayton)


Fairhurst, F.
Mann, Mrs. J.
Tiffany, S.


Farthing, W. J.
Manning, Mrs. L. (Epping)
Timmons, J.


Fernyhough, E.
Marquand, Rt. Hon. H. A.
Tolley, L.


Field, Capt. W. J.
Mathers, Rt. Hon. George
Turner-Samuels, M.


Fletcher, E. G. M. (Islington, E.)
Mayhew, C. P.
Ungoed-Thomas, L.


Follick, M.
Messer, F.
Viant, S. P.


Foot, M. M.
Middleton, Mrs. L.
Wallace, G. D. (Chislehurst)


Forman, J. C.
Monslow, W.
Warbey, W. N.


Fraser, T. (Hamilton)
Morgan, Dr. H. B.
Watkins, T. E.


Freeman, J. (Watford)
Morley, R.
Watson, W. M.


Ganley, Mrs. C. S.
Morris, Lt.-Col. H. (Sheffield, C.)
Webb, M. (Bradford, C.)







Weitzman, D.
Wilkins, W. A.
Willis, E.


Wells, P. L. (Faversham)
Willey, F. T. (Sunderland)
Wills, Mrs. E. A.


Wells, W. T. (Walsall)
Willey, O. G. (Cleveland)
Wilmot, Rt. Hon. J.


Wheatley, Rt. Hn. John (Edinb'gh, E.)
Williams, D. J. (Neath)
Woods, G. S.


White, H. (Derbyshire, N. E.)
Williams, J. L. (Kelvingrove)
Young, Sir R. (Newton)


Whiteley, Rt. Hon. W.
Williams, Ronald (Wigan)
Younger, Hon. Kenneth


Wigg, George
Williams, Rt. Hon. T. (Don Valley)



Wilcock, Group-Capt. C. A. B.
Williams, W. T. (Hammersmith, S.)
TELLERS FOR THE NOES:


Wilkes, L.
Williams, W. R. (Heston)
Mr. Collindridge and




Mr. Popplewell.


Question put, and agreed to.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Lieut.-Commander Gurney Braithwaite: Before we pass from this Clause, I desire to refer to a matter which fell just outside the scope of the previous Amendments we have been discussing, but which we were told would be in Order at this stage. Discussion on previous Amendments regarding the Profits Tax and preferential rates thereon centred on special incentives for the export trade. I desire to impress on the Government the fact that there are other incentives to which they can apply their minds. The Lord President of the Council seems to take the view that incentives are all bunk, but he made a speech last week which seemed to lead towards the direction of payments by result.
As I have said, there are other fields which can be explored. I understand that in France firms which export to the hard currency areas are permitted to retain a proportion of the dollars earned. That is one method, and perhaps there are others. There also came into our discussions on the Amendment moved by my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) the question of incentives for workers. The hon. Member for Nelson and Colne (Mr. S. Silverman) took that up and asked what incentives could be offered. He said how unworkable it would be for special sections of the community to have incentives of some kind or another. But I would point out that the Government have already done this in one important respect.
The Government have taken action, of which all of us approved, to provide special inducements to the coalminers in the form of rations. I suggest that the Government should allow their minds to run along these lines. If it is their policy to freeze wages, they should consider other incentives for those engaged in the export industries. I suggest that on these lines they might do some hard thinking,

because the situation is such as not to allow any further delay.

Mr. Chamberlain: The whole basis of this Bill has been fairly well discussed, but there are still a few things to which I wish to call attention, although I do not wish to detain the Committee long. I think it has been made clear by the Opposition—indeed, it was made very clear by the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler)—that they are bitterly opposed to the Bill and that the object of their Amendments is to wreck it, as the right hon. Gentleman in fact said. Those Members of the Opposition who have suggested that they are trying to make the Bill more balanced are overshadowed by the clear intention of the Opposition as a whole to kill the Bill.
It has been suggested that the Bill is misconceived, that its provisions will act as a disincentive to dollar earnings, and that the small additional tax which it imposes cannot possibly be borne by industry. I think all those statements are wholly fallacious. First, as regards the Bill being wrong in principle, I feel strongly that not enough has been done to bring into the Exchequer some of the additional profits which are being made and can be made, particularly in the dollar areas. Great profits are indeed being made everywhere. If the Bill had not been introduced, those least able to bear the increased burdens of today, particularly the lowest paid workers and old-age pensioners, would have had to suffer—they will in fact suffer to some extent—while those in industry, at the other end of the scale, would have been profiting.
Secondly, I think no one will deny that there are very considerable profits to be made out of devaluation in the Canadian and American markets. It is really not enough to put this Bill forward as a balancing factor. What is the net additional amount which industry will pay? I think it is in the region of £13 million. Workers and old age pensioners will certainly pay very much more


than that to meet their increased burdens. The Bill goes a little way towards a fairer balance, but it does not go all the way, and it is absurd for the Opposition to suggest that harm will be done to industry by having to pay an extra £13 million in taxation. This Opposition has said that the extra tax is penal taxation. The right hon. Gentleman the Member for Saffron Walden spoke about its vindictiveness. I have already referred to the smallness of the new additional tax, and surely it is wrong to suggest that when there are large gains to be made, not only in the whisky trade and the motor trade, but also in other trades, the Treasury should not, to a small extent at least, reap the benefit.
Thirdly, the statement that the extra burden cannot be borne either by potentially distributive profits or by undistributed profits is fantastic, as I shall try to show. What is the real position in regard to profits and taxation? Profits have gone up consistently since the end of the war. I have here the figures for 1946, 1947 and 1948. Gross trading profits, as can be seen from the White Paper which has been referred to several times, the White Paper on the National Income and Expenditure of the United Kingdom, 1946–48, Cmd. 7649, were £1,496 million in 1946, rising to £1,684 million in 1947, rising to £1,945 million in 1948. I know they are gross trading profits but, nevertheless, they show a very steep rise. In these three years the total tax paid on income in respect of interest and profits has actually gone down, as the White Paper will show. In 1946, the total tax paid was £1,100 million. By 1948 this figure had decreased to £1,020 million, largely because in that tax there is contained the Profits Tax and an Excess Profits Tax. Excess Profits Tax finished in 1946, and I know there is a spill over from one year to another, but taking the three years 1946, 1947, and 1948, the amount paid in each of those years, respectively, was: £391 million; £286 million; and £283 million.
Thus while profits went up steeply, the amount paid in taxation on interest and profits income has gone down, and the amount paid in Profits Tax and Excess Profits Tax has likewise gone down. Taking these three years again, trading profits have gone up by £449 million,

while Profits Tax and E.P.T. have gone down by £108 million. Industry is therefore £557 million to the good on these figures. Profits Tax and E.P.T. are in fact still going down, partly because E.P.T. has been tailing off. Profits for 1949 were £279 million, and the estimate for 1950 is down to £240 million. The chief reason is that, in general, there has been a ceiling put on dividends, though still enormously swollen dividends. For decency's sake, and because there has been a good deal of watering of capital, the dividend level has remained fairly stable. The result has been greatly to increase the amount which has been put into reserve as undistributed profits. This brings me to the other limb of the argument.
The statement of the Opposition that undistributed profits cannot bear this additional impost does not square with the facts. I have already pointed out—

The Temporary Chairman (Colonel Sir Charles MacAndrew): The hon. Member is not in Order now; he should have discussed this on the first Amendment.

Mr. Chamberlain: The first Amendment dealt with a decrease in the tax on undistributed profits. The Opposition said that industry could not bear this additional burden. Surely I am in Order in advancing reasons why that is not so.

The Temporary Chairman: That should have been done on the first Amendment.

Mr. Chamberlain: I was here throughout the Debate on that Amendment, and although it was rather wide, and hon. Members were constantly called to Order, I do not think it touched the point I am making at all. I think hon. Members will bear me out on that.
8.0 p.m.
I will now bring my argument to a conclusion. I have made my point to the satisfaction and, I hope, the edification of hon. Members opposite. The point I am making is that it is entirely fantastic to suggest that this small and anaemic little addition of £13 million net, which in my estimation is not nearly sufficient, cannot be borne either by profits which are distributed or profits which are not distributed. I would only reiterate what the Financial Secretary to the Treasury said about this very same thing on Second


Reading, that the facts which have been submitted to the Committee from this side of the Chamber blow sky high that fantastic proposition.

Clause added to the Bill.

Clauses 2 and 3 added to the Bill.

Schedule agreed to.

Bill reported, without Amendment; to be read the Third time Tomorrow.

Orders of the Day — LOCAL GOVERNMENT BOUNDARY COMMISSION (DISSOLUTION) [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to dissolve the Local Government Boundary Commission and to make consequential provision as respects certain enactments of the Local Government Act, 1933, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to the provisions of the said Act of the present Session in the sums payable out of such moneys under Part I of the Local Government Act, 1948.

Orders of the Day — LOCAL GOVERNMENT BOUNDARY COMMISSION (DISSOLUTION) BILL

Considered in Committee.

[Mr. BOWLES in the Chair]

Orders of the Day — Clause 1.—(DISSOLUTION OF LOCAL GOVERNMENT BOUNDARY COMMISSION AND CONSEQUENTIAL PROVISIONS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.2 p.m.

Mr. Martin Lindsay: Could the Minister of Health elucidate for us the position of urban districts which wish to apply for a Charter of incorporation as municipal boroughs. This question was put on Second Reading by the hon. Gentleman the Member for Enfield (Mr. Ernest Davies). I do not intend to make the hon. Member's speech over again, because the position of these authorities is quite well known to the Ministry. Nor is it necessary for me to expound upon the reasons why large urban districts want very properly to increase their status.
The Parliamentary Secretary, in introducing this Bill, told us that on the dissolution of the Boundary Commission we returned to the status quo as far as changes in status of local authorities are concerned. I venture to think that this is not quite correct in the cases to which I am referring because, if it were so, reversion to the 1933 Act would mean that urban district councils could petition to the King in Council for a grant of in-corporation and in suitable cases, of course, the petition would be granted. Since this Act of 1933, however, the position appears to have changed, because the Lord President of the Council said in the House on 11th July this year, in answer to a Parliamentary Question, that only in very exceptional circumstances would His Majesty be advised to grant a petition. What these local authorities want to know is, what are the exceptional circumstances? I hope the Minister may think fit to take us into his confidence and inform us, so that such urban districts as Uxbridge, Enfield, Rhondda and Solihull will know where they stand.

The Deputy-Chairman (Mr. Bowles): The Question is, "That the Clause stand part of the Bill."

Lieut.-Colonel Elliot: On a point of Order. We would hope that the Minister would reply to the invitation of my hon. Friend the Member for Solihull (Mr. M. Lindsay).

The Deputy-Chairman: I did not know whether there was to be a reply, and I was not able to follow how the hon. Gentleman's argument applied here.

The Minister of Health (Mr. Aneurin Bevan): I do not want to appear discourteous, but I cannot connect this request and this Clause. The incorporation of an urban district is not involved in the repeal of the Boundary Commission Act. If the hon. Gentleman wants me to make a general statement on the subject, and I have the permission of the House, I would say that my view is roughly the view of my right hon. Friend the Lord President of the Council—that whilst a review of local government is under the active consideration of the Government, it would be undesirable for any important changes to take place in the status of local authorities. That would apply to incorporation just as much as to the other authorities who want to become county


boroughs. If it be the correct thing—and I believe it is—that in the meantime we ought not to alter the status of non-county boroughs we should not surely alter the status of urban district councils.

The Deputy-Chairman: I do not think that this subject comes within this Clause at all.

Clause ordered to stand part of the Bill.

The Deputy-Chairman: The new Clause—(Compensation to officers and servants)—standing on the Order Paper in the name of the right hon. and gallant Gentleman the Member for the Scottish Universities (Lieut.-Colonel Elliot) and some of his colleagues is not in Order.

Lieut.-Colonel Elliot: We naturally accept your Ruling, Mr. Bowles, but I trust it will be possible for the Minister on Third Reading to make some statement a little more categorical than the rather general statement which he made on the Financial Resolution. Of course, we did not press him at the time, because we were anxious not to delay the further stages of the Bill, but perhaps the Minister will think it over again between now and that stage of the Bill.

Orders of the Day — Sehedule.—(AMENDMENTS OF CERTAIN PROVISIONS OF 23 AND 24 GEO. 5. c. 51.)

Mr. Bevan: I beg to move, in page 3, line 6, to leave out from "upwards," to "for," in line 9.
Members of the Committee will remember that on the occasion of the Second Reading of the Bill, I made a definite promise that I would consider a request which had been made from several parts of the House that we should not insist on the figure of a population of 100,000 below which it would not be possible for a non-county borough to apply for county borough status.
I should like to make it quite clear now, having regard to some of the opinions that have been expressed about this, that the substitution of 100,000 for 75,000 was an act of the Coalition Government which set up the Boundary Commission. It was not my figure at all. I inherited that figure from my prede-

cessor. The reason it was put in, I understand, was that it was necessary to have some restriction on the number of applications that might be made to the Commission for alteration of status, otherwise the applications would be made from a vast variety of local authorities. It was therefore agreed that in the meantime, in order to try to limit the number of applications, it was necessary to fix the figure. The 100,000 was fixed for reasons best known to those who framed the figure.
However, apprehensions have been expressed—and I sympathise with them—that 100,000 might appear to point to something which was not in our minds at all. It might give the impression that a local authority had to have a population of 100,000 before it could be an all-purpose authority. I do not attach any sacrosanctity to 75,000 or 100,000. I do not believe that it is possible at this stage to express any view at all about it. It was quite correct that many hon. Members in all parts of the House feared that any review which the Government are making about the reorganisation of local government might be influenced by the existence of the higher figure. It is in order to remove that apprehension that I am moving to substitute the original figure, 75,000. I have had an undertaking from some of the representatives of non-county boroughs affected by this matter, who say that in the meantime, while the review of local government is being conducted by the Government, they will not appeal to Parliament for an alteration of status. In view of all the fears that have been expressed, I am proposing this alteration.

Lieut.-Colonel Elliot: We naturally welcome the proposal which has been made by the Minister and which I think is an improvement of the Bill. I am not quite sure why the whole paragraph is being retained at all. The Minister will remember that in the discussion that went on during the Second Reading, apprehensions were expressed by hon. Members representing several boroughs that the figure 75,000 was too high.

Mr. Bevan: The 75,000 was adopted in 1926.

Lieut.-Colonel Elliot: That may be, but the Minister is now saying that he desires to sweep away the figure of 100,000. I should have thought from the


line of argument which he pursued that it would be better to leave the Bill without a figure inserted. The hon. Members for Cambridge (Mr. Symonds) and Swindon (Mr. T. Reid), and indeed my hon. and gallant Friend the Member for Worthing (Brigadier Prior-Palmer), pointed out that their towns were round about 70,000, and feared that they might be prejudiced by this proposal. As for 100,000, it is true that it was inserted during the time of the Coalition Government, but the Minister of Health and I were both fortunate. Neither of us was a Member of that Government, and therefore our withers are unwrung by its action or inaction. We approach these matters with virgin minds, a clean slate and an absolutely unbiased attitude on both sides. This is no doubt an advantage to the Committee. I hope it is. It is temporarily an advantage to the Minister.
8.15 p.m.
The other point on which I thought the Minister might have been able to say a word, was to pursue further the allaying of anxiety, which he set himself as his objective in his winding-up speech. I think he has been perhaps more successful on this occasion than he was on that, for, as the Committee will remember, we had a somewhat difficult exchange of views as to whether the Minister had really succeeded in allaying anxiety when he met the local authorities on the previous occasion. It may be within the recollection of the Committee that the Minister then passed certain strong strictures upon the provincial Press which turned out subsequently not to be fully justified by the facts.

The Deputy-Chairman: The right hon. and gallant Gentleman need not go on with that line of argument. I would remind him that we are upon a rather narrow Amendment to change the figure 100,000 to the figure 75,000. The right hon. and gallant Gentleman should not go along his present line.

Lieut.-Colonel Elliot: I do not desire to go far along that line, Mr. Bowles, but I thought that an excellent opportunity was afforded to the Minister to clear up some certain further anxieties and to allay further harassed feelings that I am sure he would not wish should be perpetuated.

Mr. Bevan: If the right hon. and gallant Gentleman is to be permitted to rake over that argument, then I must be permitted the opportunity of a full reply, and the right hon. and gallant Gentleman may not like it.

Lieut.-Colonel Elliot: There is nothing that I would like more, but I bow to the Ruling of the Chair. There are certain aspects of the matter to which I would like to refer, more particularly the remarkable part played by the Parliamentary Private Secretary, and the Labour Party's regional officer for Birmingham, Mr. Underhill.

The Deputy-Chairman: I ask the right hon. and gallant Gentleman to confine his remarks to the Amendment, and to say whether he prefers the number in the original Measure or the number proposed by the Minister.

Lieut.-Colonel Elliot: I am sticking very strictly to the Amendment, Mr. Bowles. I am saying that I prefer the Amendment because it gives further opportunity to allay anxiety which, as I say, was the objective which the Minister set before himself in his winding-up speech and in which, I am sure we will all agree, he was not so entirely successful as he might have hoped. This proposal goes some distance towards allaying anxiety, but I should have hoped that it might have been possible to go a little further and to remove the figure altogether, as the Minister has indicated. The figure still tends to give a pointer. Figures were given during the Second Reading—for instance the number of county boroughs which are already below the proposed figure. There are five counties and four county boroughs already under 50,000, and 10 counties and 20 county boroughs under 75,000. There is a certain menace to their future in the inclusion of the strict 75,000 and upwards which is proposed here.
The difficulty in which we are is that the Minister has said that a review is proceeding. We allow that point, that the review is proceeding and that it is unwise to allow any considerable number of changes to go forward. The present proposal is by way of being a limit, a turnstile to the gate so to speak, in order to limit the rush which otherwise might occur.

Mr. Tiffany: The Minister of Health has said the figure is not sancrosanct.

Lieut.-Colonel Elliot: That is what the Minister has said, but we must remember that King, Lords and Commons are going to say that the figure shall be 75,000 and upwards. The Minister was speaking of what might happen as the result of his review. I am going to repeat a French proverb that nothing lasts like the transitional. The Minister has said that he did not wish to put into force the findings of the 1947 Report because they were likely to be contentious. When the Minister of Health shrinks from legislation because it is likely to be contentious, then it must be very contentious indeed. That is not the Minister's normal attitude towards contentious legislation. If the legislation is likely to be as contentious as that, it will find itself deferred for a considerable period, and during all this time this transitional Measure that we are now passing will be on the Statute Book.

Mr. Bevan: The figure of 75,000 was there all the time that the right hon. and gallant Gentleman was Minister of Health.

Lieut.-Colonel Elliot: It is quite true that it was there while I was Minister of Health, and, as the right hon. Gentleman will know, I had some very extensive work to put through at that time; there was some very extensive reorganisation of boundaries of one kind or another. I had to put through a complete medical service as a sort of pastime, during my period of office.

The Deputy-Chairman: I hope that the right hon. and gallant Gentleman will now confine himself to this Amendment and that he will not continue reminiscing. This is the Committee stage of a Bill, and the Amendment under discussion is really quite small, however important it may be.

Lieut.-Colonel Elliot: I apologise for being led away by the Minister. I will do my utmost to avoid doing so again. It was he who referred to the period 1938–39. I merely put a tentative toe into the great ocean which the Minister had displayed for me to disport myself in. I do not wish to follow that out. Naturally we wish to get on and conclude the consideration of this Bill.
I say again that I am sure that the idea that at a very early stage a comprehensive review will have been completed, and that legislation will have been drafted, presented and carried through Parliament, is a piece of very great optimism, and I venture to prophesy that we might find ourselves operating under the terms of this transitional Measure a great deal longer than it occurs to any Member on either side of the Committee. Meanwhile, we consider that this Amendment is an improvement and we shall not divide the Committee upon it.

Mr. Symonds: As I had the privilege of introducing to the Minister the deputation from the nine county boroughs who were anxious that this Amendment should be inserted, it would be rather churlish of me if I did not take up one minute of the Committee's time to thank the Minister for the action he has taken. He has more than fulfilled his undertaking in the Second Reading Debate. All he said there was that he was prepared to consider in Committee the substitution of 75,000 for 100,000. He has done better than that. He has made it unnecessary for us to put down an Amendment. He himself has inserted an Amendment and we are grateful.
The right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot) suggested that paragraph I of the Schedule was now unnecessary, but I do not think so. Without this paragraph the restoration of the status quo would have meant that the provision of Section 139 of the 1933 Act would apply, which would mean a population figure of 75,000 as established at the previous census. The figure now is not 75,000 as at the 1931 census but the figure as estimated by the Registrar-General. In other words, it makes the 75,000 an up-to-date figure and not something entirely out of date and completely irrelevant to the present situation. There is, therefore, a definite purpose in this revised form of paragraph I of the Schedule.
Why we are particularly grateful is that we feared that the 100,000 figure might set a new standard for the future consideration of these matters. As it is, the Minister has restored the status quo


without prejudice to any future action. We were grateful for this, and we said in return that we would not in any way seek to embarrass the Minister by Private Bill activities during the life of this Parliament, and we shall be quite happy to adhere to that undertaking. The Minister's review is now going on and he himself has made it quite clear that it would be his intention for the results of such a review to be introduced very early on in the life of a new Parliament. As the situation is now restored to the status quo and there is no figure to set a new standard, we rest content and express our thanks to the Minister.

Amendment agreed to.

Further Amendment made: In page 3, line 11, leave out "one hundred," and insert "seventy-five."—[Mr. Bevan.]

Mr. George Wigg: I beg to move, in page 3, line 17, at the end, to insert:
and at the end of the said subsection (3) there shall be inserted the words—
'Provided that, where the Minister is satisfied after holding a local inquiry that it would be in the public interest, he may nevertheless make an order for giving effect to the proposals even though notice of objection has been received by him.'
I am moving this Amendment in the interests of my constituency, the County Borough of Dudley. If the Amendment is not accepted, we shall find ourselves thrown back on the provisions of subsection (3) of Section 140 of the Local Government Act, 1933, which provides that when a county borough seeks to extend its boundaries, a county or county district, merely by objecting, irrespective of the merits of the case, can prevent the use of the special procedure, and it is then forced to undertake the very expensive method of introducing a Private Bill.
The history of Section 140 is rather interesting. It was not until 1926 that a county or county district was in a position to block a boundary extension of county boroughs in this way. In 1922 a Royal Commission was set up under the chairmanship of Lord Onslow, and it was on the recommendations of the Onslow Committee that it was decided that what were regarded as the encroachments of county boroughs should be brought to a halt by a very simple device whereby, by merely making an objection, the

county borough was forced to undertake the cumbersome Private Bill procedure. What I am asking the Minister to do is to permit, after a proper local inquiry and only if it be deemed in the public interest, the use of the special procedure even though an objection has been made.
The position of a county borough such as mine, hemmed in as it is by the neighbouring county of Staffordshire and unable to build a house or a school outside its boundaries without meeting objections by the County of Staffordshire and the county districts, is most unfortunate. That is putting it very moderately indeed. For four years we have marked time hoping that something would come out of the Local Government Boundary Commission. The Minister in his wisdom has decided—and I agree with him; I only wish the action had been taken before—to put an end to that Commission's activities, and now we have got to wait for the comprehensive survey. I agree with the Minister in that approach. The problem cannot be dealt with in a piecemeal way. In the meantime the citizens of Dudley have got to have houses and their children have got to have schools.
Perhaps the Committee will forgive me if I read the Minister's own words:
Where local authorities urgently need to alter their boundaries—that is, where they require to have land in order to build houses—then we have said that, as far as the Government are concerned, we are prepared to support proposals of that kind. But we are not prepared to support proposals which are so far-reaching in their character as to make changes that might obviously have to be assimilated in the changes that the Government themselves will propose."—[OFFICIAL REPORT, 2nd November, 1949; Vol. 469, c. 517.]
8.30 p.m.
I am not asking the Minister to use the procedure set out in my Amendment to attempt, even by a side wind, what might remotely resemble a major change. I am asking him to adopt this procedure in order to simplify and hasten the methods whereby the County Borough of Dudley can have access to land on which to build houses. That and nothing more. The person who has to be satisfied that the procedure I have outlined is not abused is the Minister himself. He can see that there is an adequate local inquiry giving opportunity for the county or the county district to make representations,


to air grievances, and to represent their points of view.
Having done that, however, the Minister has the overriding duty then to see that the public interest is served and that what I would regard as abuses of procedure are not allowed to prevent an authority such as Dudley from getting the land it must have. Dudley is intimately tied up with the export drive, and if we want workers in that area they must have somewhere to live. Dudley cannot get the land and will not get it unless the Minister will do what he promised to do on Second Reading and, in addition, simplify the procedure.
It may well be that the Minister can think of simpler ways in which it can be done. If he can do that, I shall be more than satisfied, but he ought to explain to the Committee in some detail what he meant when he said on Second Reading that the Government are prepared to support a proposal to make land available for houses. We do not want support after we have drawn up a Private Bill; we want support to enable us to obviate that expensive and slow procedure. In other words, we want land, we want it quickly, and I am quite sure that the name of the Minister, which is greatly honoured in the Midlands, will be honoured even more if he will accept the Amendment.

Mr. Leslie Hale: In his able speech on Second Reading the Parliamentary Secretary made this statement:
Some changes may, however, be urgently necessary and ought not to be postponed; for example, where an authority urgently needs extra land for the continuation of its housing programme and cannot obtain the land required except outside its own boundaries."—[OFFICIAL REPORT, 2nd November, 1949; Vol. 469, c. 410.]
I am quite sure that represented the feeling of the House and of the Minister, and that it was on that undertaking that many of us felt that the Bill could be supported with more alacrity than perhaps we otherwise should have done.
Since then I have looked at the legal position, and as far as I can understand it—I do not pretend to understand the Local Government Act, 1933, completely—the position is that that undertaking cannot be implemented fully as the Bill is drawn, and it cannot be implemented as

I understand subsection (3) of Section 140 because, if any of the authorities concerned lodges an objection and does no more, then the thing is held up and the Minister will have no power to make a special Order. If I am wrong, I am quite sure that the right hon. Gentleman will correct me.
We have to deal with what I might call the facts of life as we know them, although in the strictly limited sense of this Amendment. Authorities do object to losing territory. It is a standard thing to put in a notice of objection, it is a standard thing for every local authority to argue as a matter of course, and once a notice is put in with no other purpose than for the purpose of obstruction, the whole thing may be held up, postponed, inoperative, it may be for years, it may be—[HON. MEMBERS: "For ever."]—As I understand the position—and the right hon. Gentleman will again correct me if I am wrong because I am prone to error—the only remedy available for the local authority intimately concerned is to produce a Private Bill and go through all that procedure. My right hon. Friend, with a felicity of speech that I do not claim to possess, described this procedure in his speech on Second Reading. He said:
When those orders are unopposed, when agreement has been established by local inquiry, the procedure is inexpensive and simple, but when objection is taken to the orders of the Boundary Commission the whole paraphernalia of Parliamentary counsel is invoked."—[OFFICIAL REPORT, 2nd November, 1949; Vol. 469, c. 510.]
I want to put a very simple case. Curiously enough, it affects the town of Oldham, in Lancashire, to which I have directed the attention of the House of Commons on at least one other occasion. It is not an unusual case, but a most serious and important one. Oldham has no building land of its own, and has had none for years. It is one of the worst housed towns in the country and 25 per cent. of its houses would be condemned at once if new houses were available. The whole development of the town has been impeded and obstructed for years by this wretched business of trying to acquire the right to build on land in someone else's territory. Our whole housing programme has been held up since the war for that reason. We had all the difficulties of negotiation with other authorities and the


whole of the houses we have built have been built in an adjoining rural area—a country district for the purposes of this Measure.
Naturally, Oldham wants to give decent services to those houses, but the whole question of servicing is left to the adjoining authority, who obviously have no special interest in the matter. I am not criticising their conduct—so far as I know, they are a properly and decently conducted authority. The whole matter then goes before the Boundary Commission, who consider it in detail and make recommendations which would have adjusted this state of affairs; and then, at this moment, when the whole matter has reached the stage when we had hopes at least of realising our legitimate ambitions, the Boundary Commission goes.
We now find that if we are to make the progress which we must make, and which is absolutely vital for the overcrowded inhabitants of Oldham—people are still living in back to back houses with no water supply—it is really vital that we should be able to tackle this matter at once. Because of the question of the Private Bill which, I understand, is now under consideration, I have not had an opportunity of ascertaining exact details and cannot forecast precisely what the attitude of the authorities concerned will be, but on the information I am given I think I am justified in saying that the indications are that the Lancashire County Council will not oppose it, and that they will regard the proposal as eminently proper. I have seen references to the minutes of the Lancashire County Council in which they have envisaged this thing happening, and so far as I know they have lodged no objection to it. I am not in a position, however, to say what will be the attitude of the county district.
Suppose we hold our inquiry and give notices under Section 3, and suppose the clerk of the county district, for no other purpose than, quite rightly, to protect their own purposes, says, "We must put in an objection, for the time being at any rate: that would give us an opportunity of considering the matter." I am not entitled to say that in the sense that I have guaranteed information about it, but so far as I can see that is the indication. If the adjoining county district for the purpose of the Bill—the rural dis-

trict council, as we call them—lodge an objection to protect their position, the whole of our scheme of housing development is held up, together with the erection of schools for the area, and we must come to Parliament with a Private Bill.

Mr. Bevan: indicated dissent.

Mr. Hale: My right hon. Friend says "No." I would be most grateful if he would explain.

Mr. Bevan: I will do it later.

Mr. Hale: If my right hon. Friend were to allay my anxieties now, I would have the opportunity of telling him whether they were fully allayed by his intervention.
I do not suggest that this problem does not affect many other towns, but let us consider what the Amendment is intended to do. My right hon. Friend may, quite properly, say that it is too wide or needs a little re-drafting on the Report stage. All we are saying is that where a formal objection is lodged on this inquiry which, in the view of the inspector holding the inquiry, has no fundamental merit, where it is a mere question of saying, "We object constitutionally to losing a bit of our land or territory," where the inspector having held the inquiry has come to the conclusion that in the general interests of the people in the district this thing should go through, all we are asking is that the Minister should have a chance of again considering the matter and the report of the inquiry and saying, "I am so satisfied of this and it is so important that I will let it go through. It will stop the whole paraphernalia of Parliamentary counsel being employed and the whole business of this wretched procedure upstairs." I implore the Minister to say that he will accept this important Amendment and I express my gratitude to the hon. Member for Dudley (Mr. Wigg) for moving it.

Mr. Blyton: I am sorry to bring a discordant note into the arena where so many cheers have been given for the last speech, but I suggest that, while many hon. Members are speaking for the county boroughs, at least the rural, urban and county councils ought to have some say in the matter. This Amendment is asking that the Minister should make an Order and that the right of Parlia-


ment should not enter into the matter at all. I live in a peculiar constituency; 75 per cent. of it is in the county area and the other 25 per cent. is in two county boroughs and the two county boroughs intended promoting Private Bills to take 75 per cent. of the county part of my constituency. The towns are fighting to take the urban areas, and also fighting to take the rural areas.
Sunderland Corporation have the grandiose idea of making Sunderland the metropolis of Durham. Representatives of the county boroughs of South Shields and Sunderland have sat complacently in their town halls and allocated the rural district of Boldon between themselves and settled the lines of demarcation they will take when they promote any Private Bill for extension, but they have no regard for the feelings of the rural people. The two boroughs say "You take this and we will take that and we will unite when it comes to a fight."
I think it unfair that the responsibility should be placed on the Minister, as is suggested by this Amendment. That would create great trouble between the County Councils Association and the Association of Municipal Corporations. The county councils are bound to protect themselves from the ambitions of the big towns stretching their tentacles into the counties. That may seem a huge joke to those who live in boroughs, but it is viewed with seriousness by the county councils. In view of what the Minister said last week, the county councils are entitled to use the procedure of the Local Government Act, 1933, to defend their interests in the various areas of County Durham. I ask the Minister not to be led away by speeches of hon. Members who have spoken before me, but to stick to what he said last week and to let the procedure of the 1933 Act operate. The people of the rural areas are as proud of their areas and their civic capacity as those in the towns. They should be given an opportunity of expressing their opposition to the advancement of the towns in trying to take over the areas which at present they administer.

8.45 p.m.

Mr. Turton: I have great sympathy with the speeches of the hon. Members for Oldham (Mr. Hale) and Dudley (Mr. Wigg), but of

course the remedy is not this Amendment but the withdrawal of this Bill. If the Boundary Commission were in operation to deal with these small but very important matters, the whole matter could be quickly settled.

Mr. Hale: We have been waiting four years.

Mr. Turton: That is another story, and you would probably not wish me to respond, Mr. Bowles, to the invitation to say why there has been a waste of four years in this matter. The Boundary Commission would surely have been the best body but if there is not an independent body such as the Boundary Commission, I should have thought it wholly undesirable to allow the Minister to decide after a local inquiry. I should also have thought that would be a very invidious position for the Minister to be in.
The hon. Member for Oldham talked about the problems of the extension of Oldham. That, as he mentioned, involves the absorption of a county district. If this Amendment were allowed, the position would, as I understand it, be that no county district could have its boundaries reviewed or altered until 1952 unless it was being absorbed by a neighbouring county borough. That would seem to be an unfair and unequal position for county districts. The proper method of dealing with these county districts is in those cases to have a county review under Section 146 of the Local Government Act, 1933. It would be wrong for Oldham to have this advantage of being able to absorb a county district under the proposed local inquiry procedure whereas every other urban district in the country would not be allowed to have its boundaries altered because the county revision was being postponed until 1952.

Mr. Hale: I should like it to be on the record that Oldham is not seeking to absorb any county district of any kind, but is seeking to take in a very small area of land which has been used as her housing estate.

Mr. Turton: That, I understand, involves the absorption of a part of a county district. I think the hon. Gentleman misunderstands the position; it may not follow that opposition makes an


inquiry abortive. There may be cases in which the county may be the objector but will not object to the quicker procedure which we are adopting under this Bill. I should like to ask the Minister what would be the position if such an objection were received. I am not clear what is to be the procedure. Two or three previous speakers have said that it will be by Private Bill, but the next sub-paragraph of paragraph 2 of the Schedule repeals Section 140 (4) which lays down the procedure by Private Bill. I should have thought, and I wish the Minister to explain this when he replies, that if subsection (4) is repealed the procedure by way of Private Bill will no longer be possible. In other words, there will be the quick procedure which will be open to the county council which wishes to proceed in that way, and if objection is taken to that quick procedure, the matter will be postponed sine die.
It seems to me a rather odd conclusion of this matter and one rather different from what we originally thought when we considered this Bill on Second Reading. I hope that the Minister will give us guidance on this matter. It is an added reason why the Boundary Commission should not have been dissolved but should have been retained for these small purposes of boundary adjustments.

Mr. Swingler: A very simple way for the Minister to deal with this Amendment is to turn it down. The Minister had better do that if he wishes to maintain his high reputation in the Midlands. I quite understand what has prompted my hon. Friend the Member for Dudley (Mr. Wigg) to put down this Amendment. I think I understand the problem of Dudley almost as well as I understand the hon. Member for Dudley. But when I see the representatives of South Staffordshire county boroughs conspiring with the hon. Member for Dudley I begin to wonder, because there appear to be some people who are hoping that the Minister of Health will deliver the knock-out blow to the County of Staffordshire and the representatives of South Staffordshire county boroughs are hovering like vultures to descend on the corpse. But Staffordshire is not going to become a corpse. It will kick against any such proposal or manœuvre by my hon. Friend the Member for Dudley and his hon. Friends to try to get some kind

of piecemeal reform—which was the one thing everybody turned down when this Bill was read a second time.
I think everybody agreed, when they discussed the question of the Boundary Commission or its dissolution, and how to deal with local government, that we cannot go on any longer with piecemeal reform, either in relation to boundaries or functions. But here is the hon. Member for Dudley proposing that there should be a bit of piecemeal reform for Dudley; and it is proposed that there should be a bit of piecemeal reform for Oldham and a bit of piecemeal reform for—well, quite a number of hon. Members want a little bit of piecemeal reform so long as it suits them. I agree with my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton)—what about a little piecemeal reform for the counties at the expense of the county boroughs? The truth is that we cannot go on in this way and we agree with the Minister that there must be a speedy and comprehensive review, and that nothing should be done to prejudice in advance that speedy and comprehensive review.
That is why I say that the proposals behind this Amendment should be turned down, because if such changes are made they will inevitably prejudice the review of local Government which we want to get on with and to see implemented as a whole. There is a simple solution for my hon. Friend the Member for Dudley and his friends. They should make some constructive proposals, which will be received sympathetically by my friends on the Staffordshire County Council, and try to get some agreement in order to alleviate the problem which I know exists in Dudley. But do not let us have any further tinkering about with boundaries in South Staffordshire until we have a comprehensive review of the local government problem.

Mr. H. D. Hughes: The hon. Member for Stafford (Mr. Swingler) is the representative of a sated Power. He has no territorial ambitions. I am sorry that this little civil strife has broken out in Staffordshire. The submission which I would make to the Minister is in regard to the serious problem facing one or two county boroughs. I am speaking on behalf of county boroughs which are very reasonable county boroughs, unlike, as I under-


stand, some county boroughs in Durham which want 75 per cent. of the county—

Mr. Blyton: I cannot accept that. I said that 75 per cent. of my division is in the county.

Mr. Hughes: I beg pardon of my hon. Friend—

Mr. Kirkwood: What happens when thieves fall out?

Mr. Hughes: The county borough which I represent is taking a very reasonable view indeed. The hon. Member for Stafford says that we should put forward constructive proposals. As he well knows, the county boroughs in South Staffordshire put forward constructive proposals months ago. They have received very little serious consideration from the county council. I am not for the moment discussing our long-term problem, but I entirely agree with the hon. Member for Stafford that, so far as the ultimate solution is concerned, it cannot be done piecemeal, but has to be done comprehensively.
What we are concerned with in this Amendment is the short-term issue. I want to put this point seriously to the Minister. The County Borough of Wolverhampton, like the County Borough of Dudley and places in other parts of the country, must get on with their immediate and pressing housing problems, and the present structure of local government makes it impossible to do so. My county borough, faced with this problem, have dropped temporarily their long-term proposals and have put forward a short-term proposal for a slight alteration in order to enable them to get on with their immediate housing schemes, as the Minister invited them to do during the Second Reading of this Bill. But already the county district and other authorities involved are going through the matter of form of raising objections. Therefore, even on the most narrow short-term issue, we are faced with the question of a Private Bill—not from the point of view of our long-term needs or of a comprehensive review, but from the point of view of our immediate needs.
My hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) talked about not putting the responsibility on the Minister. I do not think that the

Minister will shirk his responsibility tonight. I have never known him not to welcome a little responsibility, and I am sure that he will welcome the responsibility put upon him in the proposal now before the House. The hon. Member for Houghton-le-Spring talked about Parliamentary control. Of course, the Private Bill procedure will not bring this matter before the democratic forum of the House of Commons. In view of tonight's discussion, perhaps that is as well. However, the alternative procedure involves expensive legal costs and long legal argument on both sides; and in the last resort it is very doubtful whether the public interest will be served any better than it would be if the Minister would agree to this other simple procedure which would enable the county boroughs to get on with their immediate job.

Mr. Harold Roberts: This Debate is a foretaste of what will await the Minister. I defy the right hon. Gentleman or any Minister to create a policy which would command general acceptance. It is not for me to "make a book" or to try to predict on which side the Minister will come down tonight. But whether he accepts the Amendment or rejects it, the result cannot be very satisfactory, because by accepting the Amedment a makeshift policy would result and by rejecting it and maintaining a status quo an intolerable position would arise. The real solution might be for the Minister in the next Session to promote a Bill to set up a Boundary Commission. That would enable him to carry on pending further legislation. That is a legislative project which the Minister might consider.

9.0 p.m.

Mr. Bevan: Perhaps it might be as well if I intervened in this family quarrel at the earliest possible stage, because I know that when family quarrels start they may begin in an amiable atmosphere but they can end very bitterly indeed. First, I should like to answer for the purpose of elucidation the question asked by the hon. Member for Thirsk and Malton (Mr. Turton). I think that the situation is clear. If objection is taken by a county council or a county district to the procedure of a proposal, then the proposal can only proceed by way of Private Bill. If, however, the objection


is not to the procedure but to the proposal itself independently of the procedure, then it may be done by special Parliamentary procedure.
May I point out to my hon. Friend behind me that the discussion we have had is a perfect illustration of what is almost certain to happen when we bring forward permanent proposals for the reorganisation of local government? Indeed, this controversy which has broken out this evening is one of the reasons why the reorganisation of local government has been postponed from time to time, and the reason why we have not been able to create any piece of machinery which would be acceptable to all local authorities together. The Boundary Commission itself was not machinery acceptable to all local authorities. Many of them took exception to it, and, indeed, we shall never be able, nor indeed ought we to seek, to prevent any local authority having access to the House of Commons. It is impossible to ask that Ministers or bodies appointed by Parliament should stand between a local authority and the right of appeal to the House of Commons. We share the administration of the country with local government, and we are not entitled to deprive local government of the right of appeal to Parliament.
Therefore, it must be quite clear at once that I will be most anxious to be divested of responsibility for deciding between the different claims of competing local authorities. Parliament itself is the final court of appeal, and we ought not to take any other view about it. That is the reason why some of my hon. Friends, and in particular the mover of this Amendment and the hon. Member for Oldham (Mr. Hale), made a special plea on behalf of county boroughs as if county districts have no rights. County councils and county districts have rights, and it is the duty of Parliamentary procedure to enfranchise those rights. If county boroughs are enfranchised, so must the objectors to the proposals of county boroughs be enfranchised.

Mr. Hale: I am not following the argument of my right hon. Friend, and I am most anxious to do so. Is not the appeal to the council of the nation, which he describes in such moving terms, really an argument which comes from upstairs, comes down here and appears on the

Order Paper and enables hon. Members to say "Object," and, if they do it long enough, leads to a couple of hours' discussion here? The main point, as I understand it, is that there is bound to be a row at some time, and all we have suggested is a simple way out of the difficulty.

Mr. Bevan: It is not a simple way out at all. I will come to my hon. Friend's argument more narrowly in a minute, but it is not a way out. What the hon. Member is suggesting is a proposition which will favour the county boroughs. The whole purpose—

Mr. Wigg: Will my right hon. Friend allow me? He is most unfair. We are not asking to be favoured. The Amendment we have put forward deals with procedure, and all we are trying to get for the county boroughs is a fair crack of the whip after inquiry, and we are asking the Minister, in the absence of a Boundary Commission, to arbitrate to prevent a county district from objecting in the way in which they have always objected. One can see after listening to the speech of my hon. Friend the Member for Stafford (Mr. Swingler) what will happen.

Mr. Bevan: If my hon. Friend will look at the consequential Amendments, he will see that that is not what he is asking for at all. What he is suggesting is that the Minister himself should be armed with power for holding a local inquiry and then overruling all objections and himself deciding what alterations are to take place. I am quite certain that no Minister of Health would ever accept a position of that sort. He cannot be made the arbitrator between contending local authorities and he ought not to be put into that position.
That is not the proposal before the Committee at the moment. If my hon. Friend will look at the Amendment and the consequential Amendments, he will see that what he is suggesting is that the Minister can hold a local inquiry and then proceed by order under special Parliamentary procedure. But there is no particular advantage in that at all because special Parliamentary procedure also involves the paraphernalia of Parliamentary counsel. Perhaps some of my hon. Friends will try later this evening to show that the special Parliamentary procedure


has not all the advantages which most of its protagonists have claimed for it. Special Parliamentary procedure involves, in exactly the same way as a Private Bill, the right of the petitioners to be represented. Indeed, if the claims are contested, it can be an extremely expensive and protracted procedure. Therefore, my hon. Friends are not exempting themselves as much as they think by the Amendments which they have put down on the Order Paper.

Mr. Hale: My right hon. Friend really must not accuse us of depriving them of their right of representation and then say that there is no difference because there is still the right of representation in this procedure. In point of fact, the procedure is certainly simpler, cheaper, and more expeditious.

Mr. Bevan: My hon. Friend must not try to score such a slick debating point as that. What I said was that if my hon. Friend meant what he said he meant by his Amendment, that would then be depriving the authorities of their right to appeal to the House of Commons, and I would be bound to resist it. But, in fact, that is not what his Amendment says. His Amendment suggests that we should proceed by special Parliamentary procedure, and, as I have said, that procedure involves the employment of counsel in exactly the same way as it does in the case of a Private Bill where it is contested. Where it is not contested, then no difficulties arise at all because the Minister can make the change by order.

Mr. Wigg: My right hon. Friend ought not to take my two Amendments together. I do not want to quote rules of Order against him, but we are here dealing with the one Amendment. The other two Amendments are out of Order, and I only put them down in order to get some discussion on this Amendment.

The Deputy-Chairman: The only Amendment selected was the middle one.

Mr. Wigg: Then my right hon. Friend ought not to use against me the argument that the Amendment was out of Order.

Mr. Bevan: If my hon. Friend persists in his objection, then his proposal is all the more objectionable because, if it is

not going to be reinforced by the second Amendment, all the proposal means is that the Minister shall by order determine between a number of conflicting local authorities. I am quite sure that, on reflection, no hon. Member would ask for that to be granted; it would be an absolutely impossible position to take up. I would point out that the earlier procedure was found so objectionable that it was changed. A Royal Commission on local government recommended the procedure which is now being adopted, and we are not proposing to go back on that.
It is not correct to say that county boroughs cannot obtain land upon which to build. Indeed, that is entirely incorrect. The picture which my hon. Friends drew of massed populations, cribbed, cabined and confined within the narrow frontiers of a local authority, unable to expand, unable to move, back-to-back houses, has nothing to do with the facts of the case. Hundreds of local authorities are building outside their boundaries, so that this ridiculous situation, as it was called, does not prevent housing progress going on at all. It is going on all the while and, indeed, authorities like the London County Council are all the time building well beyond their boundaries. It is not right to say that we have a constitutional constriction of physical activities.

Mr. Awbery: But when they provide houses in areas outside their boundaries another authority has to provide the social services.

Mr. Bevan: We cannot have it both ways. We can start with common ground—that, in fact, they can do it. The houses are there. I have heard county councils complain that county boroughs have built outside their frontiers but that the very expensive educational costs fall upon the county council, so there is an entirely different side to the picture. Some of the county councils also have a complaint here, so we are not dealing with a black and white situation; we are dealing with half-tints and semi-tones and nuances of all kinds. There is no black and white position here at all.
What I said on Second Reading was that where the local authority had acquired land outside its boundaries, and was building houses upon it, there was no


reason at all why that local authority should not obtain an extension of its boundaries. I have said that and I should have thought that a protesting local authority would not have very much sympathy in the case of small changes of that sort, where the changes are urgently required in order to comprehend within the boundaries of the parent authority the physical activities it is compelled to undertake outside its own boundaries. I think my hon. Friends ought to be satisfied with that assurance. I think we have had a most interesting discussion which probably has been merely a prelude to a series of stormy debates which will occur in this House when the final proposals for the re-organisation of local government come forward.

Lieut.-Colonel Elliot: I think the Committee has greatly enjoyed having been present at a Labour Party meeting. It is an illuminating experience and one which we on this side of the House greatly enjoyed. It explains the hold-up and ham-stringing of vigorous, constructive action which has resulted in the present financial plight of this country, but the really important thing is, of course, that it reinforces a thousand times every argument that we have advanced about the desirability of proceeding by means of the Boundary Commission and not delaying everything until a comprehensive solution of all of our problems can be brought about.
I greatly sympathise with the Minister; this is an affair, as he said, of half-tints, semi-tones and nuances, differing greatly from the bold, bright colours which, as a Celt, he recommended to the House on the Bill dealing with blitzed sites at an earlier date this week. The Minister enjoys these bold, bright colours; he likes primary colours and he likes to lay them on with a broad brush. But the trouble is that at the end it always comes down to just this sort of problem. At the end of the day it is this sort of intricate, detailed problem which has to be met and, although naturally I do not wish to develop the argument at this stage, again we say that an adjustment, a fitting of the shoe to the foot, will be better in the long run and infinitely more practicable than the hope of a widespread reconstruction, covering the whole country, which the Minister mentions. I agree with him that along that line we shall find stormy

Debates—and worse, not only stormy, but also inconclusive Debates. The arguments brought forward by hon. Members on one side have been countered by arguments brought forward by hon. Members on the other, and at the end of the day it is inevitable that they will have to be determined by the blunt axe of a Parliamentary majority.
9.15 p.m.
I only say that the more the thing can be shaped beforehand the better, and that is what the original conception of the Boundary Commission was for. On the merits of the Amendment, we on this side of the Committee consider that, having swept away, or being about to sweep away, the Boundary Commission, it would undoubtedly be unfair if a limited power were given to one set of authorities which was denied to another set of authorities. That is the proposal before us, and therefore, we are opposed to that proposal.
Certainly the Minister has much justice on his side in the case he has made. The arguments are, for all that, sometimes a little conflicting and confused. The Minister argued that it was not necessary for local authorities to get land outside their boundaries because they could build houses, and were in fact building houses, there; but the Parliamentary Secretary argued that, where an authority urgently needs land for the continuation of its housing programme, the Government would not oppose strictly limited extensions. There seems to be a certain divergence of views. In practice the thing will have to be worked out by what appear to be minor adjustments.
The Minister has said the House of Commons should return to special Parliamentary procedure. He says it should return to the arguments of counsel and the discussion upstairs in Committee, against which so many speeches have been made, and on which so many eloquent perorations have terminated. That is a sound Tory conclusion, which we as Tories strongly support, and we say that if the Minister proceeds in this way there is no saying where he will end. For the moment we welcome this sign of grace, and certainly, if it comes to a Division, we shall support him in the Lobby.

Mr. Wigg: I am very glad the Debate has taken place, if only to provide the Conservative Party with an object lesson


of democracy in practice—of how men who hold fundamental differing views can yet debate with good temper, and, without trying to take an unfair advantage of one another, can argue basic differences and still be friends at the end. That is an object lesson. Perhaps hon. Gentlemen opposite will become more proficient if they follow our example.
However, I am extremely grateful to my right hon. Friend for the assurance he has given me. I note hon. Members laugh; so do I. I shall be even more grateful when he has used his great influence to extend the boundaries of Dudley. For the little I have got, I am extremely thankful. But I am even more grateful to my hon. Friend the Member for Stafford (Mr. Swingler), because he has promised to go back to the Staffordshire authorities to try to persuade them to put forward constructive and reasonable proposals and to listen to Dudley's proposals.

Mr. Harold Davies: No, he has not.

Mr. Wigg: It will be the first time in the history of Staffordshire that they will have ever adopted such a course. I am extremely glad that I did not have the opportunity of speaking immediately after my hon. Friend the Member for Stafford, because I am quite sure that, if I had done so, some of my remarks would have been quite unparliamentary. However, having said that, I am grateful for the assistance he promises, and grateful to the Minister, and I beg leave of the Committee to withdraw the Amendment.

Hon. Members: No.

Mr. Awbery: We have been discussing the question of two authorities being in disagreement, but there are cases where a county authority and a county borough are in agreement as far as an extension of the borough boundaries are concerned. What we are trying to do is to avoid the expense of a Private Bill when there is agreement. Can the Minister tell us whether there is any other procedure that can be adopted besides the Private Bill procedure where agreement has been arrived at between the authorities?

The Deputy-Chairman: rose—

Lieut.-Colonel Elliot: I think, Mr. Bowles, that leave was asked and refused by the Committee.

The Deputy-Chairman: Leave was not asked by the Chair. The hon. Gentleman asked for leave. I saw that the hon. Member for Central Bristol (Mr. Awbery) wanted to get up, and I did not ask leave of the Committee. I think that I may do so now.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Schedule, as amended, be the Schedule to the Bill."

Mr. Turton: The Parliamentary Secretary promised in the Committee stage to explain in greater detail the provisions of this Schedule. I should like to ask him in particular why paragraph 2 (3) repeals Section 140 (4) of the 1933 Act. I put that question earlier to the Minister, who very courteously replied to another question which I put to him, but not to this question. Will it be possible to use the notice for the special procedure and to ask leave to bring in a petition for a Private Bill? If not, why has the provision of Section 140 (4) of the 1933 Act been taken out?
I think that generally in this Schedule the position is very unequal. Certain alterations are to be deferred until 1952. In other cases, we are told that as a result of a gentleman's agreement no application for incorporation of a county borough is to take place until this Parliament is ended. I gather that in other cases under Section 141 there is no time-limit at all. The people who fare worse out of this are the ones who are to have their county districts reviewed but who cannot do it until 1952. I think they have been more harshly treated. In my view, there is more urgency for a review of many county districts than there is for the many sad cases which we have heard today from Dudley, Oldham and Stafford. I ask the Minister to give a further explanation of the Schedule because, on first sight, it is very complicated and it does not appear to be a fair arbitration of the rights of these different local authorities to have a proper adjustment of boundaries.

Mr. Bevan: The Amendments proposed in sub-paragraphs (2) and (4) are cones-


quential, and sub-paragraph (3) proposes to repeal subsection (4) of Section 140 as it will now be unnecessary in view of the special procedure under the Act of 1945. Subsection (4) provides that where a county borough council made an application for a provisional order extending the area of the county borough and the Minister declined to entertain it, the application for the order should be deemed to be a petition for leave to bring in a Private Bill, and that notices and deposits made should, so far as they complied with the Standing Orders of both Houses of Parliament relating to Private Bills, be held to have been made for that purpose. The object of this was to save time, since the promotion of both Private Bills and Provisional Orders was subject to a time-table and similar procedure. The procedure for obtaining a Special Procedure order is quite different from that for obtaining a Private Bill, and subsection (4) of Section 140 is no longer of any value.

Bill reported, with Amendments; as amended, considered.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Lieut.-Colonel Elliot: We have now reached the concluding stages of this Bill, which had a somewhat rough passage in its latter stages, due to the procedure adopted by the party opposite. We are still quite unshaken in our conviction that this is a reactionary step. The dissolution of the Boundary Commission is not a step in progress but a step in reaction;

it is shelving a problem which, as we have seen even tonight, is one of the most difficult problems any Parliament will have to face; and it is shelving it without proposing any constructive line of advance. Hon. Members opposite, who have inveighed against the method of Private Bill promotion of one kind or another, now find themselves faced with that and nothing more—and for an indefinite time. It has not been possible for the Minister at any stage to give any indication of the principles upon which he was proceeding.

Furthermore, at an earlier stage of the Bill we had a difficult time, to which naturally I should not wish to refer now. But I think it might have been possible for the Minister to say a few words of apology to some whom he undoubtedly traduced. I will only say in conclusion that we on this side do not wish to prolong the proceedings on this Bill. We divided against it on Second Reading and we intend to divide against it on Third Reading. It is a mistake; it is a wrong proceeding; and it is not solving any of the problems which are before the House today.

Mr. Bevan: I just want to say one thing in reply to the right hon. and gallant Gentleman. The indignation with which the Opposition has viewed this Bill was reflected in the remarkable Division on Second Reading.

Question put, "That the Bill be now read the Third time."

The House divided: Ayes, 236; Noes, 84.

Division No. 277.]
AYES
[9.30 p.m.


Acland, Sir Richard
Bramall, E. A.
Dalton, Rt. Hon. H.


Adams, Richard (Balham)
Brook, D. (Halifax)
Davies, Edward (Burslem)


Allen, A. C. (Bosworth)
Broughton, Dr. A. D. D.
Davies, Ernest (Enfield)


Allen, Scholefield (Crewe)
Brown, T. J. (Ince)
Davies, Harold (Leek)


Attewell, H. C.
Burden, T. W.
Davies, Haydn (St. Pancras, S. W.)


Awbery, S. S.
Burke, W. A.
Davies, R. J. (Westhoughton)


Ayles, W. H.
Callaghan, James
Davies, S. O. (Merthyr)


Baird, J.
Champion, A. J.
Deer, G.


Balfour, A.
Chetwynd, G. R.
Delargy, H. J.


Barton, C.
Cobb, F. A.
Diamond, J.


Bechervaise, A. E.
Cocks, F. S.
Dobbie, W.


Bellenger, Rt. Hon. F. J.
Coldrick, W.
Dodds, N. N.


Berry, H.
Collick, P.
Donovan, T.


Bevan, Rt. Hon. A. (Ebbw Vale)
Collindridge, F.
Driberg, T. E. N.


Blackburn, A. R.
Collins, V. J.
Dugdale, J. (W. Bromwich)


Blenkinsop, A.
Colman, Miss G. M.
Dye, S.


Blyton, W. R.
Cook, T. F.
Evans, John (Ogmore)


Boardman, H.
Cooper, G.
Evans, S. N. (Wednesbury)


Bottomley, A. G.
Corlett, Dr. J.
Fairhurst, F.


Bowden, H. W.
Cove, W. G.
Farthing, W. J.


Bowen, R.
Crossman, R. H. S.
Fernyhough, E.


Braddock, Mrs. E. M. (L'pl. Exch'ge)
Cullen, Mrs.
Field, Capt. W. J.


Braddock, T. (Mitcham)
Daines, P.
Fletcher, E. G. M. (Islington, E.)




Follick, M.
Lewis, T. (Southampton)
Scollan, T.


Foot, M. M.
Longden, F.
Scott-Elliot, W.


Forman, J. C.
Lyne, A. W.
Sharp, Granville


Fraser, T. (Hamilton)
McAdam, W.
Silverman, J. (Erdington)


Freeman, J. (Watford)
McAllister, G.
Simmons, C. J.


Gaitskell, Rt. Hon. H. T. N.
McGhee, H. G.
Skinnard, F. W.


Gallacher, W.
Mack, J. D.
Smith, C. (Colchester)


Gilzean, A.
McKay, J. (Wallsend)
Smith, Ellis (Stoke)


Glanville, J. E. (Consett)
McKinlay, A. S.
Smith, H. N. (Nottingham, S.)


Gooch, E. G.
Maclean, N. (Govan)
Smith, S. H. (Hull, S. W.)


Gordon-Walker, P. C.
McLeavy, F.
Solley, L. J.


Greenwood, A. W. J. (Heywood)
MacPherson, Malcolm (Stirling)
Sorensen, R. W.


Grey, C. F.
Macpherson, T. (Romford)
Sparks, J. A.


Grierson, E.
Mallalieu, E. L. (Brigg)
Stewart, Michael (Fulham, E.)


Griffiths, D. (Rother Valley)
Mann, Mrs. J.
Stokes, R. R.


Griffiths, W. D. (Moss Side)
Mathers, Rt. Hon. George
Swingler, S.


Gunter, R. J.
Messer, F.
Sylvester, G. O.


Guy, W. H.
Middleton, Mrs. L.
Symonds, A. L.


Haire, John E. (Wycombe)
Morgan, Dr. H. B.
Taylor, H. B. (Mansfield)


Hale, Leslie
Morley, R.
Taylor, R. J. (Morpeth)


Hall, Rt. Hon. Glenvil
Morris, Lt.-Col. H. (Sheffield, C.)
Taylor, Dr. S. (Barnet)


Hamilton, Lieut.-Col. R.
Morris, P. (Swansea, W.)
Thomas, D. E. (Aberdare)


Hannan, W. (Maryhill)
Morrison, Rt. Hon. H. (Lewisham, E.)
Thomas, Ivor Owen (Wrekin)


Hardy, E. A.
Moyle, A.
Thomas, John R. (Dover)


Haworth, J.
Murray, J. D.
Thorneycroft, Harry (Clayton)


Henderson, Rt. Hon. A. (Kingswinford)
Nally, W.
Tiffany, S.


Henderson, Joseph (Ardwick)
Neal, H. (Claycross)
Timmons, J.


Herbison, Miss M.
Nicholls, H. R. (Stratford)



Hobson, C. R.
Noel-Baker, Capt. F. E. (Brentford)
Tolley, L.


Holman, P.
Noel-Buxton, Lady
Tomlinson, Rt. Hon. G.


Holmes, H. E. (Hemsworth)
Oldfield, W. H.
Ungoed-Thomas, L.


Horabin, T. L.
Paling, Will T. (Dewsbury)
Viant, S. P.


Houghton, Douglas
Palmer, A. M. F.
Warbey, W. N.


Hoy, J.
Pannell, T. C.
Watkins, T. E.


Hubbard, T.
Pargiter, G. A.
Webb, M. (Bradford, C.)


Hudson, J. H. (Ealing, W.)
Parker, J.
Wells, W. T. (Walsall)


Hughes, Emrys (S. Ayr)
Pearson, A.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Hughes, H. D. (W'lverh'pton, W.)
Platts-Mills, J. F. F.
White, H. (Derbyshire, N. E.)


Hynd, J. B. (Attercliffe)
Poole, Cecil (Lichfield)
Whiteley, Rt. Hon. W.


Irvine, A. J. (Liverpool)
Popplewell, E.
Wilcock, Group-Capt. C. A. B.


Jay, D. P. T.
Porter, E. (Warrington)
Wilkes, L.


Jeger, G. (Winchester)
Porter, G. (Leeds)
Wilkins, W. A.


Jeger, Dr. S. W. (St. Pancras, S. E.)
Price, M. Philips
Willey, F. T. (Sunderland)


Jenkins, R. H.
Pritt, D. N.
Willey, O. G. (Cleveland)


Jones, Rt. Hon. A. C. (Shipley)
Proctor, W. T.
Williams, D. J. (Neath)


Jones, D. T. (Hartlepool)
Pryde, D. J.
Williams, J. L. (Kelvingrove)


Kenyon, C.
Pursey, Comdr. H.
Williams, Ronald (Wigan)


King, E. M.
Ranger, J.
Williams, Rt. Hon. T. (Don Valley)


Kinghorn, Sqn.-Ldr. E.
Rankin, J.
Williams, W. R. (Heston)


Kinley, J.
Reeves, J.
Willis, E.


Kirkwood, Rt. Hon. D.
Reid, T. (Swindon)
Wills, Mrs. E. A.


Lang, G.
Rhodes, H.
Woodburn, Rt. Hon. A.


Lavers, S.
Richards, R.
Woods, G. S.


Lawson, Rt. Hon. J. J.
Roberts, Goronwy (Caernarvonshire)
Younger, Hon. Kenneth


Lee, Miss J. (Cannock)
Robertson, J. J. (Berwick)



Leonard, W.
Robinson, Kenneth (St. Pancras, N.)
TELLERS FOR THE AYES:


Lewis, A. W. J. (Upton)
Ross, William (Kilmarnock)
Mr. Snow and Mr. George Wallace.




NOES


Baldwin, A. E.
Fraser, Sir I. (Lonsdale)
Maitland, Comdr. J. W.


Barlow, Sir J.
Gage, C.
Manningham-Buller, R. E.


Bennett, Sir P.
Gomme-Duncan, Col. A.
Marshall, D. (Bodmin)


Boles, Lt.-Col. D. C. (Wells)
Granville, E. (Eye)
Molson, A. H. E.


Braithwaite, Lt.-Cmdr. J. G.
Hare, Hon. J. H. (Woodbridge)
Morrison, Maj. J. G. (Salisbury)


Bromley-Davenport, Lt.-Col. W.
Head, Brig. A. H.
Mott-Radclyffe, C. E.


Buchan-Hepburn, P. G. T.
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Nicholson, G.


Butcher, H. W.
Hogg, Hon. Q.
Nield, B. (Chester)


Byers, Frank
Hollis, M. C.
Odey, G. W.


Challen, C.
Hulbert, Wing-Cdr. N. J.
Orr-Ewing, I. L.


Channon, H.
Hurd, A.
Ponsonby, Col. C. E.


Clarke, Col. R. S.
Joynson-Hicks, Hon. L. W.
Prescott, Stanley


Corbett, Lieut.-Col. U. (Ludlow)
Lambert, Hon. G.
Prior-Palmer, Brig. O.


Crosthwaite-Eyre, Col. O. E.
Legge-Bourke, Maj. E. A. H.
Raikes, H. V.


Darling, Sir W. Y.
Lindsay, M. (Solihull)
Reed, Sir S. (Aylesbury)


Davidson, Viscountess
Lloyd, Selwyn (Wirral)
Roberts, H. (Handsworth)


Digby, S. Wingfield
Low, A. R. W.
Roberts, P. G. (Ecclesall)


Dodds-Parker, A. D.
MacAndrew, Col. Sir C.
Robinson, Roland (Blackpool, S.)


Dower, E. L. G. (Caithness)
McFarlane, C. S.
Ropner, Col. L.


Drayson, G. B.
Mackeson, Brig. H. R.
Sanderson, Sir F.


Drewe, C.
Maclay, Hon. J. S.
Stoddart-Scott, Col. M.


Elliot, Lieut.-Col. Rt. Hon. Walter
Maclean, F. H. R. (Lancaster)
Strauss, Henry (English Universities)


Erroll, F. J.
Macmillan, Rt. Hon. Harold (Bromley)
Thomas, J. P. L. (Hereford)


Foster, J. G. (Northwich)
Macpherson, N. (Dumfries)
Thorp, Brigadier R. A. F.







Touche, G. C.
Ward, Hon. G. R.
York, C.


Turton, R. H.
Wheatley, Colonel M. J. (Dorset, E.)
Young, Sir A. S. L. (Partick)


Tweedsmuir, Lady
White, Sir D. (Fareham)



Vane, W. M. F.
Williams, C. (Torquay)
TELLERS FOR THE NOES:


Walker-Smith, D.
Williams, Gerald (Tonbridge)
Mr. Studholme and Major Conant.


Question put, and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — STATUTORY ORDERS (SPECIAL PROCEDURE)

Motion made, and Question proposed,
That an humble Address be presented to His Majesty, praying that the provisions of the Statutory Orders (Special Procedure) Act, 1945,

TABLE


Session and Chapter
Short Title of Statute
Sections and Subsections of Statute
Subject matter


24 &amp; 25 Vict. c. 45, and 1 Edw. 8 &amp; 1 Geo. 6. c. 28.
The General Pier and Harbour Act, 1861, as modified by the Harbours, Piers and Ferries (Scotland) Act 1937.
Section 15 of the Act of 1861 as modified by sections 4 and 5 (1) of the Act of 1937.
Construction of marine works.


31 &amp; 32 Vict. c. 45.
The Sea Fisheries Act, 1868
Sections 29 and 39.
Oyster and mussel fisheries.


38 &amp; 39 Vict. c. 55.
The Public Health Act, 1875
Paragraph (5) of section 297 and section 303.
Repeal and amendment of local Acts, &amp;c


5 Edw. 7. c. 23, and 14 &amp; 15 Geo. 5. c. 20.
The Marriages Validity (Provisional Orders) Acts, 1905 and 1924.
Section 1 of the Act of 1905, as extended by section 1 of the Act of 1924.
Validation of marriages.


13 &amp; 14 Geo. 5. c. 16.
The Salmon and Freshwater Fisheries Act, 1923.
Section 16 (3) and (4).
Compulsory purchase or hiring by fishery boards.




Section 37.
Regulation of fisheries.




Section 55 (2).
Pollution of waters.


15 Geo. 5. c. 15.
The Housing (Scotland) Acts, 1925, 1930 and 1935.
Section 10 (1) of the Act of 1930 and section 15(1) of the Act of 1935 as read with section 86 of the Act of 1925.
Compulsory purchase orders relating to commons, open spaces and allotments.


20 &amp; 21 Geo. 5. c. 40, and 25 &amp; 26 Geo. 5. c. 41.





20 &amp; 21 Geo. 5. c. 44.
The Land Drainage Act, 1930.
Section 2 (2).
Catchment areas.




Section 4 (3).
Schemes for Catchment Boards.




Section 8 (3).
Variation of awards.




Section 11.
Transfer of functions to Catchment Boards.




Section 17 (1) and (2).
Drainage districts and drainage boards.




Section 41 (1).
Variation of navigation rights.


23 &amp; 24 Geo. 5. c. 51.
The Local Government Act, 1933.
Section 112(1)
Union of distrcts for appointment of medical officers of health.




Section 270(1).
Transfers of functions to county or county borough councils.




Paragraph (e) of subsection (1) of section 285.
Repeal and amendment of Acts confirming provisional orders.




Section 293 (2).
Application of provisions of Act to joint boards and joint committees.

be applied to Orders hereafter to be made under any of the enactments specified in the following table, in substitution for the provisions of any such enactment providing that such Orders shall be provisional only and shall not have effect until confirmed by Parliament.

Session and Chapter
Short Title of Statute
Sections and Subsections of Statute
Subject matter


26 Geo. 5 &amp; 1 Edw. 8. c. 49.
The Public Health Act. 1936
Section 2 (2).
Constitution of port health districts.




Section 6 (1).
Union of districts.




Section 9 (2).
Amendment and revocation of orders as to port health districts, union of districts and joint boards.




Section 109 (2).
Exemption of industrial processes from provisions as to nuisances.




Section 314
Amendment of orders relating to port health authorities and joint boards.


26 Geo. 5 &amp; 1 Edw. 8. c. 51.
The Housing Act, 1936
Sections 29 (1), 36 (1) and 38 (2) as modified by section 143.
Compulsory purchase orders relating to commons, open spaces and allotments.


2 &amp; 3 Geo. 6. c. 40.
The London Government Act, 1939.
Sections 165 (1) and 166 (1) and (3).
Transfers of functions between public authorities.




Section 188 (1) (e).
Repeal and amendment of Acts confirming provisional orders."

9.37 p.m.

The Parliamentary Secretary to the Ministry of Health (Mr. Blenkinsop): I should first explain for the convenience of hon. Members that a draft of the proposed Order in Council was laid before Parliament as a Command Paper last July and that the table which is referred to in the Motion is printed on pages 4 and 5 of that Command Paper and is reproduced on the Order Paper.
Under Section 8 (3) of the Statutory Orders (Special Procedure) Act, 1945, the procedure of that Act could be applied to orders made under provisions of Acts passed before 1945 provided that an Address was presented to His Majesty by both Houses. We are now seeking to apply this simplified procedure to orders made under some 11 enactments listed in the Motion to which Provisional Order procedure would otherwise apply.
Hon. Members are aware that on this simplified procedure an order which is unopposed goes through without formality after it has been laid before the House, while in certain circumstances an opposed order is referred to a Joint Committee of both Houses. Under Provisional Order procedure the order, whether opposed or not, went to a Committee of each House. The list of Acts to which we propose here to apply the special procedure does not cover all powers to make Provisional Orders. In particular, we did not wish to make the

change where some special variation of Provisional Order procedure is provided for in the statute concerned.
The Motion is put down in order to secure a method of obtaining confirmation of orders which is quicker and cheaper, particularly so far as uncontested orders are concerned, and which does not in any way weaken Parliamentary control.

9.40 p.m.

Mr. Manningham-Buller: I had hoped to hear the Minister of Health moving this Motion in view of the observations he made so recently as last week in regard to the Special Parliamentary Procedure. It is indeed interesting to hear the Parliamentary Secretary putting forward a proposal that so many Provisional Orders should now be made subject to Special Parliamentary Procedure in view of what the right hon. Gentleman said on the Bill which has recently been under discussion in the House.
The House will recollect that under the Local Government Boundary Commission Act orders made by that Commission were to be subject to the Special Parliamentary Procedure, and when we on this side of the House commended that procedure as being better than the Provisional Order Procedure, which is in effect similar to the Private Bill Procedure, we were told by the right hon.


Gentleman that we were wrong and he said, in answer to my right hon. Friend,
an order proposed by the Boundary Commission, which was opposed in the House, would go through a most expensive, lengthening and frustrating machinery.
My right hon. and learned Friend the Member for the Scottish Universities (Lieut.-Colonel Elliot) said:
It is not so lengthy, and I do not think it is so frustrating and expensive as the procedure to which the Minister is condemning local authorities in this Bill.
to which the right hon. Gentleman replied:
No."—[OFFICIAL REPORT, 2nd November, 1949; Vol. 469, c. 500.]

Mr. Blenkinsop: I think my right hon. Friend made clear that it is specifically in the case of unopposed Measures that the new procedure is helpful and we are retaining this Special Procedure for the purposes of the 1933 Act in the Bill which has just passed through this House.

Mr. Manningham-Buller: It is being retained for the purposes of the 1933 Act, but the hon. Gentleman will agree that one effect of repealing the Local Government Boundary Commission Act is that we are thrown back on the Private Bill Procedure in certain circumstances. It was that which was under discussion at that time. We were told by the Minister on that occasion that the Special Parliamentary Procedure was
A most expensive, lengthy, frustrating machinery.
Yet tonight it is interesting to find the Parliamentary Secretary advocating a wide extension of that Parliamentary procedure without saying one word as to the respective cost of that procedure in contrast with the procedure in relation to Provisional Orders. In my view there is a goad deal to be said for the Special Parliamentary Procedure, both for saving time and expense, and I do not agree with the view expressed by the Minister of Health in regard to it. We have had some experience of this Special Parliamentary Procedure under the Water Act of 1945. I can bear in mind one particular instance where it was perhaps unduly expensive, but that, I think the Parliamentary Secretary will agree, was due to an initial error made by the Ministry of Health.
By and large, I think this procedure is beneficial and I do not think that the observations of the right hon. Gentleman to the contrary were in any way justified. I am sorry indeed not to have heard him trying to reconcile the statements in support of this proposal with the statement he made on the Second Reading of the Local Government Boundary Commission Bill. With those observations, I have no objection whatever to the proposals contained in this Resolution.

9.45 p.m.

Colonel Sir Charles MacAndrew: I could not quite hear whether the Parliamentary Secretary said that the terms of this humble Address have to be published. Did he say so at the beginning of his speech?

Mr. Blenkinsop: It is already published on the Order Paper and the proposed Order has already been issued.

Sir C. MacAndrew: That takes away part of my objection, but in any event under this new procedure the old Provisional Order Procedure which has worked pretty well for 60 or 70 years now is to go, and we are losing certain rights as regards Parliament. Under the old procedure an unopposed Bill to confirm a Provisional Order was referred to the Committees in both Houses which deal with these unopposed Bills. I understand that there will now be no Committee procedure on these unopposed Bills.
Will not the result of that be much less Parliamentary control, so that we are, therefore, giving away by this Motion rights which we have had up to now? It is not so long ago since an Unopposed Bill Committee threw out a Bill from the hon. Gentleman's own Ministry—the Bradford Bill. That right is now to go, and although this procedure is of course agreed to by the 1945 Act, we have at one bound extended it widely; it has not been experimented with. By doing that this House is losing powers of scrutiny over these—

Mr. Blenkinsop: The hon. and gallant Member will recognise the fact that if these orders are unopposed, they have to lie before the House and there is therefore an opportunity for the House to take action upon them.

Sir C. MacAndrew: My point was of course, that the Unopposed Bill Committee could if it liked take action against them, as it has done, although that is very unusual. That power is being lost. I do not intend to divide the House against this proposal, but I consider that the House is losing some of the rights which it has had in the past.

9.47 p.m.

Mr. Molson: This new procedure was introduced with the intention of facilitating and expediting the kind of Measure which had previously been dealt with by Provisional Order, and it was introduced for a strictly limited number of Measures. It was first thought of by the late Government as a speedy way of providing public works for dealing with mass unemployment. It was applied to the Water Act, 1945, the Town and Country Planning Act, 1944, and the Boundary Commission. It may not be entirely a coincidence that on the same night on which the House of Commons has been asked to abolish the Boundary Commission, it is asked by this humble Address to extend the scope of this Special Procedure to many other Measures.
When the procedure was introduced into this Parliament, the Lord President of the Council indicated that it was purely experimental and that it was not intended to extend it until experience had been gain of the working of this new procedure. He said:
The present Government agree with the late Government that the new procedure is experimental and that we shall have to watch how it goes. We think also that it may be wise to defer its further application until some experience of its working has been granted, but we see no good reason for any postponement for so long a period as five years or indeed for any statutory bar at all.
That referred to the change made in the Measure introduced by this Government as compared with that introduced in the last Parliament by the Government of that time. The Lord President went on to say:
The matter is better left to commonsense."—[OFFICIAL REPORT, 18th October, 1945; Vol. 414, c. 1379.]
I oppose this humble Address because it seems to me that sufficient experience has not as yet been gained as to how this procedure will work. So far as my information goes, there has been only one

case in which an order under this procedure has been opposed. I think that was the Mid-Northamptonshire Water Board Order, which was got through this House by the Confirmation Bill.

Mr. Blenkinsop: It is true that there is only one case in which it has been opposed, but there have been many cases, I believe some 29 or 30 cases, which have been unopposed.

Mr. Molson: That is perfectly true. The reason I originally opposed this Measure—and I have tried to keep an eye on it ever since—is that it does seriously diminish the right of the subject to have the issue treated in a forensic and impartial atmosphere upstairs. The first reason given by the Government for this procedure was that it would economise time. In the single case of which we have had experience where an order has been passed, the order was first advertised in December, 1947. There was a local inquiry in Northampton in April, 1948. The draft order as proposed was published by the Minister in October, 1948. There was a joint committee of both Houses in February, 1949, and the Bill obtained the Royal Assent on 31st May, 1949. Therefore, this procedure on that occasion took no less than 18 months to become effective, whereas the ordinary time taken by the Provisional Order Procedure was about six to nine months.

Mr. Manningham-Buller: The hon. Member is aware that on this occasion there was an abortive local inquiry, and that caused considerable delay.

Mr. Molson: Yes, that is true, but again it was one of the features of this procedure that the local inquiry should take place, and it was thought that by having a joint committee it would be possible to avoid going over the same matter time and again. Therefore, so far as economy of time is concerned, the very limited experience that we have had so far of this particular procedure does not tend to encourage one to extend it to other Measures.
In the second place, under this procedure there can be petitions against the order, which can be of two kinds; either a petition for amendment or a petition of general objection, and the matter is referred to you, Mr. Deputy-Speaker, in your capacity as Chairman of


Ways and Means and the Lord Chairman of Committees. On this one single occasion you were of opinion that these were petitions for amendment and therefore the petitions were referred as a matter of course to the Joint Select Committee under Section 4, subsection (2) of the Act. On that occasion a great inconvenience of the procedure was discovered, because it was held—and this was the opinion of almost all the experts upon the subject—that the petitioners who petitioned for amendment to the order had to state their reasons for the amendment before the promoters of the order were required to state the general purposes of the order. It very greatly embarrassed the petitioners that before the real purpose of the order had been explained, they were required to explain why they objected to it. It appears to me to be a case of putting the cart before the horse.
There is also the case of petitions of general objection. That to my mind has always been the kind of case where the rights of the subject, and indeed of the local authorities, have been most seriously diminished under this procedure. After the passage of these four years, as it now is, we have no experience whatsoever as to how a petition of that kind will in fact be dealt with. The procedure, as a further study of the Bill has shown, is extremely cumbrous. It is intended that in cases where there is a perfectly bona fide case to be argued, it shall be referred to a joint committee upstairs. That was made perfectly plain by the movers of the Bill and it was further amplified in committee upstairs. But, as a matter of fact, where it is considered desirable that the matter shall be investigated, with counsel being heard on both sides and plans and drawings produced, and so on, it is necessary for two "stooges" in this House to move the annulment of the order so that those who really intend to have the matter investigated may move an Amendment to the Motion for annulment in order that it may be referred to a joint committee. That is done under the proviso to Section 4 (1) of the main Act.
My criticism of this procedure throughout has been that in cases where there is a petition of general objection, it is unreasonable to expect the back bencher whose constituency is affected by an order

of this kind to keep the House and to get someone to move a Motion for the annulment of the order so that he may then move an Amendment to ensure that the matter may be referred for consideration by a joint committee of both Houses. During the passage of the Act, an assurance was given by the right hon. Gentleman the Member for Wakefield (Mr. Arthur Greenwood), who at that time was Lord Privy Seal and acting Leader of the House, that in all cases where there really was need for impartial examination with the help of counsel and all the facilities of a committee upstairs, the Government would not use their majority to prevent the matter from being fairly considered in that impartial atmosphere.
I have no doubt that the Government will honour the undertaking then given. But when tonight we are asked to extend this Special Procedure to a whole list of other Acts at present on the Statute Book, I feel justified in recalling to the Government that the Lord President of the Council said that it was intended that this should be experimental and that it should not be extended until experience had been gained of the working of this procedure. I also feel justified in reminding the Government that there has been only one case in which an order under this Special Procedure has been opposed; that there has been no case where you, Mr. Deputy-Speaker, or your noble colleague from the other place, have held that it was a petition of general objection; that it is obviously an extremely cumbrous procedure that matters of that kind can only be referred to a Joint Select Committee after a petition of general objection when an Amendment is moved to the Motion for annulment; and that in the case of the one order that has been opposed the time taken by this procedure was about double what it was under the old Provisional Procedure.
Therefore, I say that those of us who have been doubtful about the advantages of this procedure are justified by the one single example that there has been. I very much regret that the Government now propose to extend this procedure in this way, because I do not feel that there has been that delay in order to gain experience of the procedure which was proposed by the Lord President of the


Council when he originally moved the Bill.

10.0 p.m.

Mr. Joynson-Hicks: I think my hon. Friend the Member for The High Peak (Mr. Molson) made a very strong argument indeed against this form of procedure, and there seems no doubt that he confirmed the case which was made by my hon. Friend behind me. It is a procedure which, while perhaps not intending to do so, in fact loosens Parliamentary control, because there can be no doubt from experience in these matters that it is impossible for this House, on the examination of these orders, to give the same detailed investigation to them as is possible in a Committee upstairs.
I am assuming that the Parliamentary Secretary would not trouble the House in moving this Motion unless he had some intentions, and I regard the matter with very considerable suspicion. I want to know why it is that the hon. Gentleman desires this special procedure in order to get an order through quickly in regard to some of these matters. What, for instance, is he hatching in the way of an order in connection with oyster and mussel fisheries, and what has he in mind with regard to compulsory purchase orders concerning commons, open spaces and allotments? They are matters which do interest a very wide circle of people and which involve a very great deal of investigation by large organised representative bodies, which ought to have the opportunity which, in my submission, they had under the old procedure to a far greater extent than now, of having their objections properly heard.
Again, what about the validation of marriages? Presumably, the hon. Gentleman is intending to make some orders about that, and we ought to know what he has in mind. Why has he picked on these particular Acts of Parliament under which he proposes to make orders—about 11 of them altogether? Has he chosen them with a pin out of the general Acts of Parliament that are dealt with by his Department, or is there any possible motive lying behind the whole matter? So far as I can see, the selection of Acts of Parliament to which to apply this procedure is just about as confused as the Government's policy in all directions.

10.3 p.m.

Mr. Blenkinsop: With the leave of the House, I want to say a word or two in response to points raised by hon. Members opposite. I should say, first of all, that we have already had considerable experience of the working of this Measure, and although it is true that in only one case has an order been contested, we have had the experience of 30 other orders which came before the House, and, under the previous procedure, would have been involved in quite costly and lengthy procedure, but which, under these provisions, have been enabled to go through the House under a very much less costly procedure and with greater advantage to the promoters and everyone concerned.
I feel that some hon. Members, and particularly the hon. Member for The High Peak (Mr. Molson), have merely repeated the views they expressed to the House on the Second Reading of the main Statute which was dealt with at that time very fully. We feel that, although it is true that if an order is contested the procedure is still lengthy, there is real advantage over the procedure that is supplanted, and particularly is that true under orders which are not contested. It is mainly for these reasons that we feel that it is highly desirable, for the benefit of everyone concerned, that we should now consider this further limited extension. As I mentioned in introducing this Motion, this is not a comprehensive list of Measures, but we have been particularly anxious to avoid including any Measure in this list under which there was any special variation of procedure that we would not in any way wish to alter. I trust, in view of the fact that the original Act was passed by agreement of the House, that we shall have the agreement of the House on this Motion to which I have been addressing myself tonight.

Mr. Henry Strauss: My hon. Friend the Member for Chichester (Mr. Joynson-Hicks) asked about compulsory purchase orders relating to commons, open spaces and allotments under the Housing Act, 1936. Can the hon. Gentleman say whether there has been any consultation with the amenity societies who are very much concerned with that topic?

Mr. Blenkinsop: The simple answer is that, in fact, this does not affect the opportunity of objecting, or anything of that kind. This is merely adopting a procedure which was felt to be more expeditious and less expensive to everyone concerned.

To be presented by Privy Councillors or Members of His Majesty's Household.

Orders of the Day — DULCOTE HILL, WELLS (QUARRYING)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Popplewell.]

10.6 p.m.

Lieut.-Colonel Boles: I want to draw the Minister's attention to the threat to Wells which has been brought about by his decision to carry on with the quarrying of the two hills surrounding that city, Dulcote and Milton. In the case of the City of Wells, these two hills are situated on either side, and nestling between them is the City and its Cathedral. I think it is admitted by everybody that this makes one of the most beautiful views in England. As regards Milton Hill, the Minister has allowed quarrying to proceed for a period of 15 years, although he admits that it is at the expense of some amenity and recreational value. That cannot be helped, but when we come to the case of Dulcote Hill we have a different situation because that lovely view is being definitely sabotaged.
The view of Wells City and its Cathedral, looked at from the north with the background of Dulcote Hill behind it—of which the important part is the crest line—undoubtedly forms part of the framework of a most beautiful picture. It is a picture which is looked at by thousands from all over the world in order to obtain spiritual inspiration. It is admitted by all that this view is the object of visits by Americans and people from far overseas, as well as, of course, the Cathedral of Wells and other objects of interest. It is the danger to one of these main objectives of the tourists and of what one might call visitors to the shrine—of which we hold so many in our County of Somerset—to which I wish to draw attention. We in Somerset regard ourselves in a way as the guardians for

Britain of some of our oldest and earliest traditions. We have Glastonbury, which has been described as the holiest earth in England, and there are many others.
Dare we, or dare the Government, abrogate and overrule these aesthetic considerations for a mere short-term commercial interest? The quarrying on Dulcote Hill has taken place hitherto on the south side and has not interfered to any great extent with amenities, view or anything else, because Wells lies to the north. The time has now arrived when the Minister has given permission for this skyline, to which we attach so much importance as a background to Wells City and its Cathedral, looking at it from the north, to be quarried through and for the top of the hill to be lowered 100 feet. The Minister based his resistance to our protests on the fact, as he saw it, that there was some special stone in this Dulcote Hill. This now turns out to be untrue and he himself admitted that it was no longer a ground for his decision. The stone, therefore, can be obtained from anywhere in the Mendips, and there are a great many places in the Mendips where the objections which are raised in the case of Dulcote Hill could by no means be raised.
I feel that we, as guardians of these beautiful things in Somerset, these things of spiritual value, should resist this ponderous, materialistic roller which traverses and flattens the aesthetic values which we attach to so many places in Somerset. It should be resisted by us in every possible way and with the greatest justification.
I appeal to the Minister to realise, or to the Parliamentary Secretary to persuade the Minister to realise, that we are very much in earnest in this matter. He may say that these points were not brought out at the local inquiry which was held in 1947, and that is, in fact, the case, but they have been brought out since and there is no reason why he should not consider them now. He should give them the full weight which they undoubtedly deserve and which they should carry in a matter of this sort, where the short-term commercial interest is balanced against these long-term spiritual, aesthetic imponderables which mean so much, in the balance, to our people in Somerset and to the people of England, who look beyond this purely materialistic moment to a future in which they hope to get that


same inspiration as they have had in the past from these beautiful objects and considerations which we hold so dear in Somerset.

10.14 p.m.

Mr. Hollis: I am very glad indeed that my hon. and gallant Friend the Member for Wells (Lieut.-Colonel Boles) had the luck of the ballot in order to raise this matter. I do not propose to cover the general ground he has so admirably sketched out, but simply to challenge the Minister on two very serious matters in which, in my opinion, he misled the House when he was questioned about this on 25th October. A number of Questions were asked and I think it only fair to myself to state that I told the right hon. Gentleman, the Minister, that I proposed to raise these matters and if he is unable to be here that is his business. I warned him that I proposed to raise them. On 25th October, in a supplementary question, I ask the right hon. Gentleman:
Is not the Minister aware that, in point of fact, this decision was taken under the impression that there was a unique value in this particular limestone, and that it now turns out not to be so?
The Minister replied:
There have been no new circumstances at all. The facts which the hon. Member states were brought out fully at the inquiry.
What are he facts? The facts are that when the Minister gave his ruling on 6th April, 1949, he wrote:
The Minister is however advised that this area contains only a limited amount of high quality stone, and that a large proportion of that superior stone is located in the northern and western slopes of the hill.
Now, Mr. Balch the eminent geologist—perhaps the greatest living authority on the limestone of Somerset, informs me that that is quite untrue. Therefore, when we waited on the Minister on 23rd September in a deputation I asked him about this point, and he then said, "I am making no claim that Dulcote stone is of any special value," and based his case on a quite different ground, the difficulties of housing.
The first question I asked the Parliamentary Secretary is then, that being so, by what right does the right hon. Gentleman say there have been no new circumstances at all—when he has, quite confessedly contradicted himself, and has entirely changed his ground?
The second point is this. The hon. Member for Bedford (Mr. Skeffington-Lodge) asked a couple of supplementary questions on that occasion, and the second was:
Has the Minister looked into the possibility of this quarrying being carried out in the Mendips and the necessary material coming from those hills, by abandoning this project altogether?
The Minister replied:
I have looked into the question of an alternative site, but I am quite satisfied that wherever one goes there will be objections like the one made by hon. Members today."—[OFFICIAL REPORT, 25th October, 1949; Vol. 468, c. 1129 and 1130.]
That answer, as it stands, is so self evidently ridiculous that it would be an abuse of the time of the House to delay upon it. Nobody could conceivably pretend that objections to other projects are like the objections to the Dulcote project. There are in fact 10 alternative sites—Watership near Shepton Mallet, Moon near Shepton Mallet, Downhead near Frome, Emborough, Binegar, Sandford, Cheddar, Mells, Vouster and Whatley, where the limestone is of exactly the same quality. Whatever objection there may be to the 10 alternative sites—I am not aware of any—there cannot be the same objections as there are to the Dulcote project, because there is no question of an aesthetic view being interfered with at all.
Without delaying upon the verbal point I come to the substantial point. In his ruling on the Milton project. On 18th August, 1949, the Minister said:
The Minister considers that the question whether a suitable alternative source of supply is available in an area of less amenity and recreational value than Milton Hill should be explored during the intervening period provided by the present permission.
That is to say, in the next 15 years.
He considers the examination of this question can best be dealt with by examination of the mineral resources of the country and the location of deposits suitable for supplying that need, which is now being carried out by this Ministry.
That is to say, in August the right hon. Gentleman took the line that he could not possibly find an alternative site until the geological survey was complete; in September he took quite a different line, that he was not concerned with alternative sites but with the housing question; and in October, in spite of the fact that the geological survey had not reported, he


said he had looked into alternative sites. As he was unable to decide about alternative sites in August without the report of the geological survey how was he able to do it in October though the geographical survey has not yet reported? Then, what is the precise meaning of this phrase, "looking into"? It is certainly not true in a physical, literal sense, because we know that neither the Parliamentary Secretary nor the right hon. Gentleman has been anywhere near the site.

The Parliamentary Secretary to the Ministry of Town and Country Planning (Mr. King): Perhaps, the hon. Gentleman would be prepared to withdraw that remark forthwith because it is quite untrue.

Mr. Hollis: Has the hon. Gentleman been there?

Mr. King: I have been there.

Mr. Hollis: If the hon. Gentleman says he has been there, I will, so far as he is concerned.

Mr. King: The hon. Gentleman said that neither the Minister nor the Parliamentary Secretary had been near the place. In point of fact I have been there.

Mr. Hollis: I entirely accept what the hon. Gentleman says. I understood that my hon. Friend invited the Parliamentary Secretary down and that he said that he had not been there. If he says he has been, I withdraw entirely. But the Minister himself told us the other day that he had not been there, and it was the Minister who said, "I have looked into" the matter. I would say that he has not in any physical sense looked into it. Nor has he looked into it on the basis of the geological survey. What is the precise meaning of those words "I have looked into" it?

10.19 p.m.

Mr. Skeffington-Lodge: I think the weakness of the Minister's case has been adequately exposed by the two hon. Gentlemen on the other side of the House who have so far spoken. This is a matter of national importance. I therefore make no apology to the House for butting in on the affairs of a constituency other than my own. No other cathedral in England, and possibly none in the whole of Great Britain, unless it be St. David's Cathedral in Wales, has a

natural setting of such beauty as Wells Cathedral. In itself that cathedral is a gem of medieval architecture, started in 1220 and finished, I think, about 1224, and it is one which, as the hon. and gallant Member for Wells (Lieut.-Colonel Boles) has said, has considerable interest for people who come to this country from America and elsewhere overseas.
To mutilate the hills around this cathedral by altering their contour is not only to insult good taste but is to desecrate a scene of charm and splendour which is part of the heritage of the British people. That such a sacrifice should be made, or asked for, for a purely totalitarian or commercial purpose shows, as the hon. and gallant Member for Wells has already pointed out, how far the imponderables—I would even say the spiritual values of this country—are left out of account today.
I do not for one moment accept the assertion that the limestone produced by extending the quarry at Dulcote Hill cannot be obtained elsewhere. The claim is made that if it was obtained elsewhere similar objections would be raised. That, I think, is nonsense. The objections in this case are overwhelming; elsewhere that cannot possibly be so. I want to make an emphatic protest against what would amount to blasphemy in stone if this project is insisted upon, and I ask my hon. Friend to deal sympathetically with the case which has been put forward tonight.

10.22 p.m.

Mr. Collins: While I do not want to indulge in quite the strong language which my hon. Friend the Member for Bedford (Mr. Skeffington-Lodge) indulged in, I support in as emphatic a manner as possible the plea made by the hon. and gallant Member for Wells (Lieut.-Colonel Boles). My hon. Friend said that this was something which belonged to the nation. We in Somerset feel that it is something which belongs peculiarly to Somerset and is, indeed, part of the whole spiritual life of the county. The word "amenity" does not really describe how we feel about this matter.
I have studied for some time the correspondence and Ministers' statements on this matter. On one occasion, I think that the reply was that only a small portion would be cut off the top of the hill. I assure my hon. Friend that we in Somer-


set will be much incensed if he tells us that all he wants is a little bit off the top. That will certainly not do at all. We have had evidence which I think is indisputable that the claims of commerce cannot be regarded as paramount in this matter because there are alternative sites and in yesterday's "Times" a public inquiry held by the Minister in Dorset almost exactly describes the position that has arisen at Wells. The Dorchester rural district council have refused to extend sand and gravel workings at Blagdon because it was held that the landscape would be damaged. I do not think that there is any justification for proceeding with this matter at Dulcote and I hope my hon. Friend will have regard to the plea which has been put forward.

10.24 p.m.

The Parliamentary Secretary to the Ministry of Town and Country Planning (Mr. King): The first parts of the speech of the hon. and gallant Member for Wells (Lieut.-Colonel Boles) were wholly delightful and I am sure the House enjoyed them as they did about one-quarter of each of the other speeches to which we have listened. Most of them were graceful and pleasant tributes to the beauties of the English countryside in which we would all join, but a few of the speeches made specific accusations as to the damage which it is suggested we are going to do.
I cannot help wondering how many hon. Members in this House who have listened to these four speeches have realised that if all these horrors which we have heard spoken about at Wells are done, there will not from Wells be any visible quarrying of any kind whatever. Few people have realised that. It is true that no mis-statement has been made about it, but that is the fact, and that is the kind of misconception which I very much fear has got about widely, both in the House and in the newspapers.

Mr. Henry Strauss: When the hon. Gentleman says that there will be no visible quarrying, does he mean that people will not see that the height of the hill has been lowered?

Mr. King: What I said was quite clear. From Wells itself no sign of any quarrying will be visible. I am coming to the

point about the hill very shortly. I am dealing with one point at a time.
What precisely are the charges made against us? Why are we being attacked? I want to go back into history a little. We passed into law the Town and Country Planning Act, 1947; we are implementing its provisions; and in particular we are implementing decisions to preserve the beauty of Dulcote Hill and the City of Wells. Those decisions have been violently attacked by the Opposition. [HON. MEMBERS: "Nonsense."] Indeed, I understand from their recent conference that they are anxious to repeal the Town and Country Planning Act altogether, and inevitably therefore to repeal any decisions of this character which might have been taken under it.
The Dulcote Hill quarry has been in existence just on 70 years, and throughout that time no Government—mainly Governments supported by hon. Members opposite—has taken the least interest in preventing spoliation which might be going on there, or indeed in any of the other quarries in the country.

Mr. Orr-Ewing: Surely the hon. Gentleman is not suggesting that in the course of the last 70 years any suggestion was even made, or in fact any work ever done, to remove the top of the hill. This is an entirely new project.

Mr. King: I was taking a very much wider instance than that in referring to the vast vandalism created by quarrying throughout the country.

Mr. Godfrey Nicholson: Get to the point.

Mr. King: I am coming to the point, which I am glad to note the hon. Gentleman wants to hear.
Under the Town and Country Planning Act we recently held a public inquiry, from which these facts emerged. The site at Dulcote runs to 80 acres; the plant is impressive—it is modern, clean, and ideally situated on the south side of the hill. That is, the side remote from Wells; it is well served by road and by rail; the cost of the plant there installed was £110,000, exclusive of railway sidings; the capacity is 80,000 tons a year; and from that quarry and the plant we derive material for agriculture, railways, roads and buil-


dings. We have to bear in mind, as does the House, having regard to the economic crisis in which we stand, that there is a countrywide shortage of limestone; we want two million tons more per year than we have, even if we develop every existing quarry we can find. That is particularly true of the South-West of England. For example, there is none at all in Cornwall.

Mr. Nicholson: Why not pull down Wells Cathedral and have done with it?

Mr. King: That is precisely what could have happened under a Tory Government.

Mr. Nicholson: Be sensible.

Mr. King: That is perfectly true; it could have happened until the Town and Country Planning Act was passed.
In the Dulcote Hill quarry the quality of the stone varies. It is better in the west and in the north. Here I want to refer to the speech of the hon. Member for Devizes (Mr. Hollis), who referred to the word "unique." The hon. Gentleman saw my right hon. Friend when I was not present, and I cannot know what was said, but my impression is that the Minister has never used the word "unique."

Mr. Hollis: I did not say he did. I used the word "unique" when referring to a quotation.

Mr. King: I think the word was used by a questioner and not by the Minister. The fact is, the stone is of high quality, and I do not think my right hon. Friend has ever claimed any more than that it is of high quality.

Mr. Hollis: It was said to be of superior quality.

Mr. King: The difference between "superior quality" and "high quality" is not very substantial.

Mr. Hollis: There is all the difference in the world.

Mr. King: Let me turn for a moment to the inquiry itself. It is true that there were some objectors, but they were few in number, and the number of persons from Wells who objected was small. Most of the objection was stimulated by one person—and he was perfectly entitled to stimulate it—a Mr. Tarbat, who got

something like six articles in the newspapers and got a B.B.C. feature. But that is not based, we feel, on deep opposition in Wells itself. Indeed, I think that most of those who were at the inquiry came away with the impression that a compromise solution would have been satisfactory to most of those present.
The local authorities, it is true, were opposed to unrestricted consent, but it was the general view that a compromise, if possible, could be brought in. Nor is it a fact that Dulcote Hill is essentially a popular walk. Indeed, the mayor himself confessed that he had never been there until he was accompanied there by an official of the Ministry of Town and Country Planning. It is asked why not quarry only the south of the hill. The point was that the stone on the south side is of inferior quality. In the decision we have taken our objective was to guard the amenities of Wells. We have said that quarrying operations shall go so far and no further. We have avoided any quarrying which would show from Wells. We have preserved the hill as a hill. It is true that the skyline will gradually, within 30 years, fall a few feet; but the difference is small, and I do not believe it will be noticeable.
Quarrying on the western spur is prohibited entirely. On the northern face it is prohibited below the 300-ft. contour. It is required that trees shall be planted, that when the excavation is over the plant will be taken away and the waste disposed of within the quarry itself. The decision is, in fact, in favour of a limited amount of quarrying in the northern quarter because the stone is of high quality. These limitations we have imposed. The most important point of all is that we have already sterilised one million tons. That is our contribution to the aesthetic side.
We have sterilised already, I repeat, one million tons to satisfy the views of hon. Members who have spoken. I suggest that that is no mean contribution towards that amenity which we, in the Ministry of Town and Country Planning value as highly as anybody; and, perhaps more than some hon. Gentlemen opposite appear to think. If we were to sterilise, in addition, the stone in the north, we should then sterilise another 2½ million tons and that is not a reasonable thing to be asked to do, especially when it


would not preserve the aesthetic qualities of this part. I would emphasise that no quarrying will be visible from the City of Wells, nor from the Wells-Shepton Mallet road.
Sometimes I do not know what hon. Gentlemen opposite want; they do not understand the functions of the Ministry of Town and Country Planning. To sterilise—and that means to waste—mineral wealth, unless by so doing there is a real contribution to amenity, cannot be in the national interest at this hour. Then, some hon. Members say, "Go somewhere else." Where can we go? There are similar objections wherever one goes—[HON. MEMBERS: "No."] Quarrying takes place in that position where quarries now are, not by chance, but for definite reasons; and those are four—because of the quality of the material quarried; because of the lie of the land, because of means of transport, road or rail—and here there are both—and because it is suitably situated having regard to its market. These reasons all obtain on this site. Before hon. Members suggest it, let me say that if they have the Mendips in mind, they were classed as a conservation area in the Hobhouse Report; equal objection would be taken to that.
Finally, it may be appropriate to remind ourselves that we have, ultimately, very limited natural resources; first, of agricultural land, secondly, of mineral wealth and thirdly, of water power; and it is of the utmost importance that the best use be made of these resources. We have in the Ministry of Town and Country Planning to have regard to each. We value beauty and aesthetics perhaps more than some hon. Members of this House and I suggest that we have done more to safeguard beauty in these last few years than has ever been done before in the history of this House. Previously there was no power to act, but we have these powers now, and it is because of the 1947 Act and the action which has been taken by my right hon. Friend that Dulcote Hill has been saved from destruction.

Mr. H. Strauss: Miserable: disgraceful.

The Question having been proposed after Ten o'Clock and the Debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Twenty-four Minutes to Eleven o'Clock.